Tag: accredited investor definition
Acting SEC Chair advocates “cost-effective regulations for every stage of a company’s lifecycle”
Yesterday, Acting SEC Chair Mark Uyeda delivered remarks to the Florida Bar’s 41st Annual Federal Securities Institute and M&A Conference focused on regulatory efforts affecting every stage of a company’s lifecycle. Setting the stage, Uyeda characterized his “first priority” as an effort to “return normalcy” to the SEC after the “stark aberration” of the immediately preceding Administration “from longstanding norms as to what the Commission has historically viewed its legal authority, policy priorities, and use of enforcement.” That means returning the SEC “to its narrow mission to facilitate capital formation, while protecting investors and maintaining fair, orderly, and efficient markets,” and creating “capital markets that facilitate the competitiveness and ingenuity of American industry.” And that effort begins with “enabl[ing] private companies to obtain more capital through cost-effective means,” “enabl[ing] more retail investors to place their capital into private companies,” regulatory actions to “help make IPOs attractive again,” and finally, revisiting the rules governing the disclosure obligations of public companies to reduce complexity and ensure that “smaller companies are not disproportionately burdened as they compete.” Given that Uyeda was previously counsel at the SEC to former Commissioner, now Chair nominee, Paul Atkins, I would guess that there’s a pretty good chance that his views on these topics are largely in sync with those of Atkins and, presumably, we can expect proposals on these topics in the new Administration.
SEC issues staff report on definition of accredited investor
On Friday, the SEC announced the issuance of a staff report on the accredited investor definition, a review that, as directed by Dodd-Frank, occurs every four years with the objective of assessing “whether the requirements of the definition should be adjusted or modified for the protection of investors, in the public interest, and in light of the economy.” As described in the report, this review is “focused on changes in the composition of the accredited investor pool since the definition was adopted; the extent to which accredited investors have the financial sophistication, ability to sustain the risk of loss of investment, and access to information that have traditionally been associated with an ability to fend for themselves; and accredited investor participation in the Regulation D market and the market for exempt offerings more generally.” The report examines the history of the accredited investor definition and changes in the economic landscape that might affect the composition of the pool of accredited investors and describes historical comments and recommendations for changes to the accredited investor definition. However, unlike the staff’s 2015 report (see this PubCo post), this report did not make any recommendations regarding changes to the definition and instead simply welcomed public input. Public comment may be particularly impactful this year given that, according to the SEC’s most recent reg-flex agenda, Corp Fin is considering recommending that the SEC propose amendments to Reg D, including updates to the accredited investor definition and to Form D, “to improve protections for investors.” The target date for a proposal is April 2024.
SEC proposes new accredited investor definition and new rules for disclosure of payments by resource extraction issuers (updated)
At an open meeting this morning, the SEC proposed changes to the definition of “accredited investor,” as well as new rules relating to disclosure of payments by resource extraction issuers. As discussed below, Commissioners Robert Jackson and Allison Lee dissented on both of these proposals. Notably, the responses of all the Commissioners to these proposals highlighted their sharply divergent views on the role of government and the fundamental purposes of the securities laws. Both proposals will be open for comment for 60 days.
SEC posts concept release on harmonization of private securities offering exemptions
Today, the SEC posted its new, much anticipated concept release seeking public comment on ways to harmonize and streamline the patchwork universe of private placement exemptions and “to expand investment opportunities while maintaining appropriate investor protections and to promote capital formation.” The comment period will be open for 90 days from publication in the Federal Register.
What happened at the Small Business Capital Formation roundtable and Advisory Committee meeting?
This is National Small Business Week and, to kick things off, the SEC today held a brief roundtable featuring representatives of small business and investment funds in a discussion of the challenges of raising funding outside of the four key tech hotspots (San Francisco, San Jose, Boston and NYC) as well as other challenges associated with public company status as a small business. After the roundtable, the SEC’s Small Business Capital Formation Advisory Committee held its inaugural meeting. At the meeting, Corp Fin Director Bill Hinman discussed the SEC’s agenda (including the upcoming proposal that could limit the application of the SOX 404(b) auditor attestation requirement).
SEC Committee on Small and Emerging Companies completes final report and recommendations
At the final meeting yesterday of the SEC Committee on Small and Emerging Companies (apparently soon to morph into the Small Business Capital Formation Advisory Committee), the Committee finalized the discussion draft of its Final Report to the SEC and heard presentations on SOX 404(b), the most recent bête noire of deregulation advocates. (The Committee also heard a presentation on Rule 701, which will be addressed in a subsequent post.)
SEC staff report on review of “accredited investor” definition
by Cydney Posner Today, the SEC issued a staff report, required under Dodd-Frank, on the staff’s review of the accredited investor definition. The purpose of the accredited investor concept is to identify, using a bright-line definition, “those persons whose financial sophistication and ability to sustain the risk of loss of investment […]
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