SEC Moves to Relax Investment Prohibitions


SEC, code

The United States Securities and Exchanges Commission (SEC) has opened a 90 days consultation period on whether they should relax investment prohibitions. According to a statement just released, they say:

“The Securities and Exchange Commission today requested public comment on ways to simplify, harmonize, and improve the exempt offering framework to expand investment opportunities while maintaining appropriate investor protections and to promote capital formation…

The concept release seeks input on whether changes should be made to improve the consistency, accessibility, and effectiveness of the Commission’s exemptions for both companies and investors, including identifying potential overlap or gaps within the framework. It also considers, among other things, whether:

The limitations on who can invest in certain exempt offerings, or the amount they can invest, provide an appropriate level of investor protection or pose an undue obstacle to capital formation or investor access to investment opportunities.

The Commission should take steps to facilitate a company’s ability to transition from one offering to another or to a registered offering.

The Commission should expand companies’ ability to raise capital through pooled investment funds.

Retail investors should be allowed greater exposure to growth-stage companies through pooled investment funds such as interval funds and other closed-end funds.

The Commission should revise its exemptions governing the secondary trading of securities initially issued in exempt offerings.”

Criticized for failing to take into account new innovations that can provide business models for open source development, and criticized for failing to adapt or in any way keep up with the digitization of the economy, SEC now appears to finally be moving towards modernization. They say:

“We believe our capital markets would benefit from a comprehensive review of the design and scope of our framework for offerings that are exempt from registration.

More specifically, we also believe that issuers and investors could benefit from a framework that is more consistent and addresses gaps and complexities.

Therefore, we seek comment on possible ways to simplify, harmonize, and improve the exempt offering framework to promote capital formation and expand investment opportunities while maintaining appropriate investor protections.”



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