This will be the first in a series of blog posts on the topic of the SEC’s proposed changes to the exempt offering matrix. This first one is (mostly) about process.
The SEC has proposed changes to its rules for exempt offerings. The rules would change aspects of Regulations A, CF and D and the way they all work together. We’ll be getting into the details over the course of the next few weeks, but we wanted to mention a few things before diving in.
First, these are PROPOSED rules. They are not going into effect for a while (see timing below). They might never go into effect. They might just sit on a shelf gathering dust. They might get changed and reproposed. Some of the proposals might be adopted, some might be shelved and some might be adopted in changed form.
Second, timing: the comment period is open for 60 days from publication in the Federal Register, which hasn’t happened yet. The SEC won’t take any action until the comment period is closed, the comments are analyzed and the final rules are drafted, voted on by the Commissioners and published. Best guess for the fastest option is that the comment period ends mid-May, the SEC Staff work like mad, the rules (or some of them) are refined and published in an Adopting Release towards the end of the summer and the new rules go into effect after a notice period of 60 days (the minimum period for rules affecting small businesses). So maybe by Halloween?
However, Halloween is getting close to the election. Even though the SEC is an independent agency, election results could impact the makeup or the anticipated makeup of the Commission, and if the package is not passed before Election Day and the Administration changes, people might be a bit leery of adopting any rules.
Also, note the current makeup of the Commission. Only four Commissioners and one of them was against the changes. It’s unlikely that any of the existing Commissioners would change their vote but this could be a 3:2 vote if the new gal/guy is in place by then.
Don’t forget that this package is not popular with everyone (and we have some issues with some of the proposals – to come). There have been lawsuits trying to prevent existing exempt offering regulations going into effect in the past and you should not rule out that possibility this time.
And a reminder that these proposals are not an indistinguishable monolith. Some proposals within the package could be adopted and others abandoned. Proposed rules can be changed in the Adopting Release if the Proposing Release asked for input on alternative versions of the rules.
So, finally, a reminder that it is important to comment, even if you agree with the proposals as drafted. If the Commission says: “We are proposing Thing A but please tell us if Thing B might be better” and you think Thing A is just peachy, say so. Because if you don’t and everyone commenting prefers Thing B, Thing B is the way the Commission is going to go. Comments can be formal letters or just a few lines uploaded directly into the comment file.
More to come, including our take on all the stuff the Concept Release discussed but that didn’t show up as proposals. . .