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[cintrix]

In a departure from its longstanding tradition of investor protection, the SEC, in its Regulation A proposal, flouts Congressional intent by seeking to preempt state authority and in so doing deprives unsophisticated investors of important protections they have enjoyed for years.

Typically, when a company seeks to raise capital by marketing securities to a broad audience, it must first register its offering with the SEC, a state (or states), or both to ensure that potential investors have adequate information upon which to make informed investment decisions and to ensure that the enterprise seeking the capital is not operating in an unjust or unfair manner. An offering may qualify for an exemption from registration if it limits the amount of funding sought and the types of investor to whom it is marketed.

One of these exemptions, Regulation A, has allowed unregistered public offerings of up to $5 million of securities in a 12-month period. Title IV of the Jumpstart Our Business Startups (JOBS) Act of 2012 increased to $50 million from $5 million the amount of money that can be raised through these offerings.

The JOBS Act recognized the strong investor protection role provided by state securities regulators in reviewing Regulation A offerings as part of the registration process. Yet in its proposed rule implementing Regulation A, the SEC ignored Congressional intent by eliminating a state’s ability to review these offerings before they are sold to the public. Unless reversed, the SEC’s proposed rule stands to harm investors as well as small and local businesses.


http://www.nasaa.org/issues-and-advocacy/issue-brief-regulation-a/


or

www.investopedia.com/terms/r/regulationa.asp