This is the time of year when tiny tots, with their eyes all aglow, ask their mothers, “When will Chair White release the rules, Mommy?”
Sorry, I got caught up in this week’s Santa-is-coming-with-crowdfunding-rules/Santa-is-not-bringing-anything-but-coal meme. There have been several articles published in the last few days speculating that the SEC’s rules for either Section 4(a)(6) (crowdfunding under Title III of the JOBS Act) or expanded Regulation A (Title IV under the JOBS Act) are imminent. Or alternatively, not imminent at all.
So let’s go through what we actually know. The SEC itself hasn’t made any statements on timing of these rules, because the SEC only “speaks” through its Releases. Various SEC people have made statements about timing, most importantly the Chair, who has indicated her intention to have the rules done before the end of the year. But you may remember that the Chair before last also indicated the same thing… in 2012.
Getting the rules done before the end of the year is going to be challenging at this point. The Administrative Procedures Act requires that rules be adopted in open meeting, and also requires two weeks’ notice of a meeting, unless the duty Commissioner certifies that the full notice period isn’t possible. And in general recently, that’s the way it’s worked for open meetings. A notice goes out on Friday night announcing a meeting on the following Wednesday or Thursday, accompanied by a statement that the duty Commissioner determined that no earlier notice was possible. I’ve never seen a shorter notice period than that. So we can rule out this week. Next week the Advisory Committee on Small and Emerging Companies is meeting all day on Wednesday and the Commissioners all generally drop in on that. And then the holidays kick in.
At the other end of the speculation spectrum we have some statements about the SEC delaying the rulemakings until October of 2015. This is based on the twice-yearly publication of the agency’s “Regulatory Flexibility Agenda.” All government agencies making rules have to give notice to the American people of the rules they are working on, and when they expect next steps to be taken. But these dates are not binding and are never precise. The SEC’s list of pending rules, which reflects the state of affairs on October 10, 2014, gives the date “10/00/15” as the date for final action on the crowdfunding rules, and in fact for nearly all the rules the SEC is working on. Why is this? Because when asked for a final date for rulemaking, staffers aren’t in a position to make any predictions and so the default date that gets entered is the end of the fiscal year.
So do we have to wait for the zeroth of October? That’s unlikely but I’d be surprised if we got the rules this year at this point. The main thing is that there really is no new news here, so we are getting ourselves all worked up at any sound that could be interpreted as Santa’s footsteps on our roofs.