On October 7, 2016, a bipartisan contingent of members of the U.S. House of Representatives and the president of the North American Securities Administrator Association (NASAA) coordinated a duel message to the SEC regarding its rule amendments to accommodate intrastate crowdfunding. The specific SEC rules at issue are Rules 147 and 504.
The letter from the congressional group included fifteen total signatories from both sides of the aisle and offered support and a few changes to SEC Release No. 33-9973 – Proposed Rule Amendments to Facilitate Intrastate and Regional Securities Offerings. Separately, Mike Rothman, NASAA President and Minnesota Commissioner of Commerce, issued a press release commending the congressional letter and indicating NASAA’s full support of the SEC’s proposed rule changes:
“NASAA has strongly supported the SEC’s efforts to modernize Rules 147 and 504, and we are encouraged to see members of Congress, led by Rep. Tom Emmer (R-MN) and Rep. Gwen Moore (D-WI), weigh in to support the SEC’s important proposed actions. These key changes will benefit small and local businesses conducting intrastate crowdfunding and regional securities offerings to raise capital, while maintaining important investor protections.
The much-needed improvements to Rules 147 and 504 could provide a tremendous benefit to small businesses in the 35 U.S. jurisdictions that have regulations to implement intrastate crowdfunding exemptions.”
The congressional letter offered a specific technical change to the proposed rules that would make “Rule 147 a safe harbor under Section 3(a)(11) of the Securities Act . . . to avoid state legislatures from having to amend their existing crowdfunding statutes.” In addition, the congressional letter asked the SEC to remove the proposed $5 million offering cap, because “states are better positioned to determine offering and investor caps that best meet their local population and business needs.”