At today’s PLI Securities Regulation Institute conference, SEC Chair White delivered the keynote address. In her speech (see link: https://www.sec.gov/news/speech/building-dynamic-framework-for-offering-reform.html), Chair White addressed a broad range of topics. She noted the successes of securities offering reform as an important initiative undertaken by the Commission that balanced access to capital formation with investor protection concerns. As cited in her speech, over the three-year period that ended on September 30, 2014, WKSIs undertook more than 1,500 equity offerings, almost three per issuer, with gross proceeds totaling about $523 billion. Over the same period, WKSIs also undertook more than 2,700 debt offerings, more than three per issuer, with gross proceeds totaling about $1.4 trillion. She also cited a number of studies that have assessed the quality and frequency of company disclosures. As a cautionary note, Chair White observed that concerns have been expressed by certain investor groups regarding the speed of issuance for shelf take-downs, which have caused the Staff to consider whether “speed bump” measures would be appropriate. This would be a very significant change in market practice.
Chair White addressed some preliminary “impacts” associated with the JOBS Act. She noted that since the JOBS Act became effective, nearly 1,000 EGCs have confidentially submitted draft registration statements for IPOs, and EGCs represent about 85% of the IPOs that have gone effective since the JOBS Act was enacted. The Chair noted that “under Rule 506(c), issuers are taking advantage of general solicitation and advertising, but at a lower rate than issuers using the traditional exemption in Rule 506(b) that does not allow such activity. A record amount, $1.3 trillion, was reported as raised through Rule 506 offerings in the last completed calendar year 2014. But only a small fraction of issuers claimed the new exemption permitting general solicitation.” She noted that there were some enforcement inquiries open relating to companies’ failure to take reasonable steps to verify the status of investors, sales to unaccredited investors, unregistered broker-dealer activity, and some instances of possible fraud.