Thursday, July 5, 2012

GAO: Will JOBS Act Increase Number of Reg A Offerings?

I have a mental problem.

When the conversation turns to Reg A I can't get Bunny Wailer/Bob Marley out of my head.
Specifically, "Lively up Yourself".

Folks at the table might think I smile because I like the deal when what's really going on is I'm seeing the attorneys with dreads, easy skankin' a spliff and talking that crazy Rasta talk “Burn the Pope. Burn the Pope man….The Pope is a vampire, wants our blood. Selassie I is the head", singing backup while Bob and Bunny do "Lively..." as live theme music.

From Security Law Prof:
The GAO issued a report on Factors That May Affect Trends in Regulation A Offerings (GAO-12-839, Jul 3, 2012), a timely topic since the JOBS Act increased the cap for Reg A offerings from $5 million to $50 million.  This is what the GAO found:

The number of Regulation A offerings filed and qualified (that is, cleared) by the Securities and Exchange Commission (SEC) has declined significantly after peaking in fiscal years 1997 and 1998, respectively. In particular, offerings filed since 1997 decreased from 116 in 1997 to 19 in 2011. Similarly, the number of qualified offerings dropped from 57 in 1998 to 1 in 2011. Securities attorneys GAO interviewed suggested that the decrease in filings after 1997 could be attributed to a number of factors, including the increased attractiveness of Regulation D. The National Securities Markets Improvement Act of 1996 preempted state registration requirements for other categories of securities including certain Regulation D offerings, which are also exempt from SEC registration. In contrast, Regulation A offerings are generally subject to state securities laws and must go through a federal filing and review process. In recent years, businesses have used Regulation D and registered public offerings to a greater extent than Regulation A....MORE