What is the worst thing about the SEC’s proposed rules?
Is it the requirement that lengthy legends be prominently displayed on all written general solicitation material? Nah. We can live with this requirement.
Is it the requirement to file a terminating amendment to the Form D on the closing of a financing? Nah. We can suffer through this one as well.
Is it the requirement to file all written general solicitation materials with the SEC before their use? Nah. We can figure this out and comply.
Is it all the additional information we will have to put on Form D? Again, nah. We can struggle through that.
Is it the imposition of additional filing deadlines? Again, these are painful, and will increase our legal expenses as we do offerings. But again, this isn’t the worst of it.
Is it the penalty box? The 1 year we have to sit out if we miss a deadline and don’t cure? This one is really draconian.
Although it’s a close call, I think the new requirement that is even worse than the 1 year penalty box is the requirement that companies file the Advance Form D 15 days before generally soliciting.
The 15 day advance filing deadline is going to trip many companies up. For my money, after considering it, I think this is the worst feature of the new rules. And if there were only one thing I could ask the SEC to change, I would ask that they change this. I think a 15 day deadline AFTER the date of first sale is fair. Does anyone (including the SEC) actually think the SEC is going to review filings and do anything to protect the public during the 15 day advance filing period? I doubt it.