Private companies and investment firms will still need to refrain from talking publicly about their fundraising plans, at least for the near future. That’s because the SEC will not meet a July 4 deadline for a rulemaking on provisions of the JOBS Act that would lift a ban on general advertising for private offerings.
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WASHINGTON, June 27 (Reuters) – U.S. securities regulators will not be able to meet a tight deadline to complete new rules such as one that would lift a ban on general advertising for private securities offerings, a top official will tell lawmakers on Thursday.
In prepared testimony, Securities and Exchange Commission Chairman Mary Schapiro will tell a U.S. House oversight panel that certain rulewriting deadlines imposed by the JOBS Act “are not achievable.”
“The 90-day deadline does not provide a realistic timeframe for the drafting of the new rule, the preparation of an accompanying economic analysis, the proper review by the commission, and an opportunity for public input,” she said.
The JOBS Act was enacted in April with wide bipartisan support and aims to reduce regulatory burdens for smaller companies to help them raise capital and eventually go public.
The law changes numerous U.S. securities laws, giving companies greater ability to solicit investors for private offerings and permitting a new capital-raising strategy known as “crowdfunding” where investors can take small stakes in companies over the Internet, among other reforms.
Some of the law went into effect immediately after it was signed by President Barack Obama, but other parts require SEC rulemaking.
The JOBS Act comes at a busy time for the SEC, which is still far behind on completing much of the required new rules under the 2010 Dodd-Frank Wall Street reform law as well as market structure reforms following the May 6, 2010 “flash crash.”
Prior to the law’s passage, Schapiro had been critical of portions of the JOBS Act, saying it could erode too many critical investor protections.
Since it passed, however, she has pledged to work as speedily as possible to implement its provisions.
Despite the tough timeline for the general solicitation rule, Schapiro said that staff has “made significant progress” on a recommendation and economic analysis.
“It is my belief that the commission will be in a position to act on a staff proposal in the very near future,” she said.
By Sarah N. Lynch