Tag: Regulation D
Corp Fin issues new and revised Securities Act CDIs—primarily Reg A and Reg D
Corp Fin has just issued a slew of new and revised CDIs regarding the Securities Act and related rule and forms—primarily Reg A and Reg D. Some are updates that relate back to the 2020 amendments designed to harmonize and simplify the patchwork universe of private offering exemptions. (See this PubCo post.) There are also a few CDIs related to Reg Crowdfunding. And, in a burst of housekeeping, Corp Fin has also withdrawn a number of mostly ancient CDIs. The highlights here are two new CDIs under Rule 502: New Question 256.35 and New Question 256.36. CDI 256.35 outlines factors that should be used—and how they should be used—in applying a reasonableness standard to assess accredited investor status. CDI 256.36 reflects a new no-action letter describing how, in a high minimum investment offering, an issuer could reasonably conclude that reasonable steps have been taken to verify accredited investor status—new guidance that is expected to simplify the private offering process. The CDIs are summarized below and, for revised CDIs, a ink to the prior version is included.
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.
A few new CDIs on Rules 147, 503 and 504, as well as Reg A
Today, Corp Fin posted a number of new CDIs that reflect updates for the amendments to Rule 147 (intrastate offers and sales) and Reg D Rules 503 and 504, and withdrew some CDIs in light of the repeal of Rule 505. There are also a number of changes throughout the CDIs interpreting Rule 147 and Reg D that Corp Fin describes as non-substantive based on current rules, such as changes to correct outdated references. The CDIs with these non-substantive changes are identified in the CDIs only by an asterisk and have not been updated to reflect a September 2017 date. Corp Fin has also removed the Reg D CDIs “that do not directly relate to the Commission’s current rules.” The CDIs identified as having substantive changes are summarized below, along with three new CDIs related to Reg A that were posted last week.
Corp Fin posts new CDI related to integration under Reg D
by Cydney Posner More CDIs from the Corp Fin, one of which, described below, relates to integration under Reg D. There are also three new CDIs relating to Reg A, new 182.12, new 182.13 and new 182.14.
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