SEC delays JOBS Act, Startups Reg A versus D 506

Regulation A and Regulation D is heavily different under JOBS Act according to David Drake of LDJ Capital and David Weild, former vice chair of Nasdaq. SEC officially announced it will miss the 90 day deadline to amend the Reg D exemption 506.

PRLog (Press Release)Jun 29, 2012
As expected, the SEC officially announced it will miss the 90 day deadline to amend the Reg D exemption 506 under the Securities And Exchange Commission (SEC) Act of 1933.  Reuters last night reported “In prepared testimony, SEC Chairman Mary Schapiro will tell a U.S. House oversight panel that certain rulewriting deadlines imposed by the JOBS Act “are not achievable.”

 Regulation D 506 was mandated by Congress to be implemented by July 4, 2012 with President Obama’s signing it into law on April 5, 2012.  This clearly indicates that the SEC needs to create structures and processes that will take far longer than 90 days.Tough decision to make by the SEC in an election year.  Mr. Drake quotes “While unfortunate, we understand the potential complications from unscrupulous firms looking for investors via TV and internet. The relaxation of the “rules”  is not just something that can be taken lightly.  Yet, it is amazing how we changed fundamental limits of the law that was created the SEC in 1933; that’s 79 years ago.  A little patience will get us and SEC where we need to be.”

Meanwhile, we have a busy week coming up July 11-13th nationwide.  The Soho Loft is happy to support the Crowd Funding Intermediary Regulatory Advocates (CFIRA) July 13 event in Washington, DC where congressmen, senators, SEC, FINRA will be joining discussions on the Crowd Funding bill.
We have head of Compliance, Corporate Finance and Trading and Markets from the SEC confirmed attending.  This is a Huge event and if you are close you should attend.

“CFIRA is committed to working with the SEC, FINRA and members of Congress, including representatives from the offices of Senator Jeff Merkley, Senator Scott Brown and Congressman Patrick McHenry, in order to facilitate the rule-making process. We hope that by hosting this summit and symposium on July 13 we can assist in expediting this process, “ D.J. Paul, Co-Founder and Chief Strategy Office of CrowdFunder and an Executive Committee member of CFIRA.

On July 11-12th in NYC, OneMedplace is hosting with The Soho Loft the semi-annual life science conference at the Metropolitan Club.  The Soho Loft is extending press and media exposure for all guests buying tickets to this leading life science event.  The opening evening includes former vice chairman of Nasdaq David Weild, speaking about the JOBS Act.

Interestingly, Mr. Weild and Mr. Drake, had discussed Regulation A and how it would affect early stage companies
vis-a-vis a Regulation D, 506 exemption under the JOBS Act (the former suggested to raise the  exemption from $5 to $50 million and the latter removing the ban on general solicitation but cannot take money from unlimited unaccredited investors).   Mr. Drake says “Regulation A unfortunately had the disaster from the Senate and Congress of not having a timeline given to the SEC to implement it.  Thus, SEC may decide to do proper research and delay its implementation for as long as 5 years.”   Yet again, we feel the SEC likes the Reg A amendment of the law better than most other of the JOBS Act changes.

Continuing, David Drake notes “Regulation A has the advantage versus Regulation D that Broker/Dealers can take money from non-accredited investors while mass-marketing an indication of
interest for an offering.  One also has tradable securities thereafter from doing a Regulation A exemption versus a Regulation D 506 exemption.   These were the leading arguments as to why Mr. Weild and legislators pushed through this provision within the JOBS Act.”  David Weild added “Reg. A has the advantage over Reg. D of providing freely tradable securities to investors, but in both instances, aftermarket solicitations will likely be governed by State Blue Sky.”