Presented by The Deal
Two years after the JOBS Act was approved by Congress some key regulations based on the statute have yet to be approved. A key provision known as Reg A+ seeks to allow companies to raise up to $50 million annually without many of the costs and delays associated with an IPO. Backers contend that the measure, which is still not approved by the SEC, will create an intermediate level of public securities, opening up new options for small companies to raise money from retail and institutional investors, all of which will act as stepping stones to full-blown IPOs. However, a battle is raging over the appropriate role for state securities regulators who believe they can do a better job ferreting out fraud than the SEC.
JOBS Act observers are still waiting for the SEC to adopt a final “crowdfunding” rule, which would ease restrictions on small businesses to raise up to $1 million annually from small investors. This has put a spotlight on concerns about fraud, on one side, and issues about costly audits on the other.
Meanwhile, some provisions are in place and already being used. A key JOBS Act rule, known as general solicitation of private offerings, allows hedge funds and startup firms to advertise on television and the Internet when seeking private capital. This new advertising freedom has already been embraced by hedge fund managers and others. However, observers are concerned that it could complicate private so-called demo days or pitch meetings hosted by investor associates, private equity firms and others. State securities regulators are also wary.
On September 23, with the help of a panel of thought leaders on this topic, we’ll tackle some of these and other issues dividing regulators and dealmakers as the brave new post-JOBS Act investment world takes shape.
Ronald Orol, senior editor - The Deal
Gregory J. Nowak, partner – Pepper Hamilton LLP
Marianne Hudson, executive director - Angel Capital Association