Over 200 deals may be advertised under new U.S. SEC rules — Reuters

More than 200 private securities deals are expected to take advantage of new rules that allow hedge funds and other firms to reach investors through Internet and television advertising, a top U.S. Securities and Exchange Commission official said on Wednesday.

The latest statistics, provided to reporters by SEC Corporation Finance Director Keith Higgins on the sidelines of a congressional hearing, suggest small companies are eager to reap the benefits of the new rules, which took effect last month.

The rules were required by the 2012 Jumpstart Our Business Startups (JOBS) Act, a law that relaxes federal securities regulations to help small businesses raise capital and go public. Some of the provisions in the law went into effect right away.

However, lifting the 80-year old ban on general solicitation in certain private securities offerings only took effect after the SEC completed the new regulations. The final rule was adopted by the SEC in July and advertising began on Sept. 23.

Higgins said that, collectively, the offerings that will be advertised aim to raise over $1 billion in capital.

Since implementation, 170 new offerings have indicated in filings with the SEC that advertising is planned, and another 44 offerings that predated the rule have filed amended paperwork suggesting they will be advertised, Higgins said.

In addition, companies advertising private deals so far have submitted 26 ads to the SEC for review as part of a voluntary program to monitor how investors are solicited.


Higgins spoke with reporters about the advertising rules following a Senate Banking subcommittee hearing on Wednesday to get a progress report on how the JOBS Act implementation is going so far at the SEC.

In addition to finalizing the general solicitation rules, the SEC also proposed another JOBS Act rule earlier this month that would permit small companies to use “crowdfunding” to solicit the general public over the Internet for small investments.

The commission has yet to propose a third JOBS Act measure that would make it easier for small companies to take advantage of a rule known as “Regulation A,” which permits them to privately raise up to $5 million without registering their securities with the SEC.

Over the years, companies have rarely taken advantage of the exemption. Critics say companies are deterred not only because the amount is small, but also because the deals are subject to varying “Blue Sky” state laws. These laws require that securities offered for sale be registered separately in every state where they are sold.

The JOBS Act aimed to fix this problem by raising the $5 million cap to $50 million. It also requires the SEC to study the impact of “Blue Sky” laws on Regulation A offerings and whether anything can be done to make it easier for companies.

At Wednesday’s hearing, Rick Fleming, the deputy general counsel for the North American Securities Administrators Association, announced that his organization is releasing a proposal to tackle the problem so companies would not be deterred from using the SEC’s new Regulation A proposal.

Under NASAA’s plan, state regulators would create one streamlined filing and review system. Although states could still police the offerings for possible fraud, small businesses seeking to offer private deals in multiple states would only need to register once.

(Reporting by Sarah N. Lynch./ Editing by Andre Grenon).

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