Concerned about the decline in the number of public offerings, the JOBS Act requires the SEC to amend Regulation A (or to adopt a new regulation) to raise the threshold for use of that registration exemption from $5 million to $50 million, and requires the GAO to study the impact of state securities laws on Regulation A offerings.
- trends in Regulation A filings,
- how states register Regulation A filings, and,
- factors affecting the number of Regulation A filings and how the number of filings may change in the future.
The GAO provided a draft of the report to the SEC and the NASAA for their review and comment. Both provided technical comments, which the GAO incorporated as appropriate. In its letter, the NASAA concurred with the GAO’s findings that multiple factors have affected use of Regulation A, and suggested that the primary reason for its limited use is the “mini-public offering” process that businesses must complete. Stakeholders with whom the GAO did not consistently cite any single factor as the primary reason for the limited use of Regulation A. As noted in the report, the NASAA stated that it will be working to develop model state registration requirements for the larger Regulation A offerings allowed under the JOBS Act, and NASAA suggested that further changes to federal securities laws, particularly Regulation A, should be withheld until states implement a new system to address the JOBS Act’s changes. In considering any changes, the NASAA stressed the importance of balancing the needs of investors with the need to raise capital.
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