Subject: File No. JOBS Act Title II
From: Michael Scillia
Affiliation: Director, National Investment Banking Association

May 30, 2012

filed via e-mail to rule-comments@sec.gov
Ms. Elizabeth M. Murphy, Secretary
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

Re: Section 201 of Title II of the Jumpstart our Business Startups Act of
2012 (the JOBS Act)
Dear Ms. Murphy:
The National Investment Banking Association (NIBA) thanks you for the opportunity to provide comments related to the Securities and Exchange Commissions (SEC) request for comments in advance of its rulemaking in connection with the enactment of the JOBS Act. NIBA appreciates the opportunity to comment on the JOBS Act and the rules to be promulgated thereunder. Our comments will focus on the following issues:

1. Reasonable Steps to Verify. Accredited Investor Status by Issuers.
2. Distinction between Offerings conducted by Issuers that utilize a registered FINRA member Broker Dealer versus offerings that are self-conducted by issuers without Broker Dealer involvement.
3. Use or non- use of general solicitation and/or advertising in Regulation D private placement offerings.
4. Safe Harbor provisions

NIBA (www.nibanet.org) is an eleemosynary organization comprised of several hundred FINRA member firms (member firms), approximately 95% of which are defined by FINRA as Small firms (those with under 150 registered associates). These firms employ approximately 8,800 registered persons have been responsible for the underwriting or placement of over $10 Billion in equity and debt for predominantly Small Issuers, as that term is defined by the Commission, and Small Businesses, as that term is defined by the Small Business Administration, have been responsible for approximately 90% of the underwritten IPOs or primary and secondary registered offerings of under $20 million per offering represent approximately 60 different industry sectors and services and manage approximately $78 Billion in client assets, at the retail and smaller institutional levels.

1. Definition of Reasonable Steps to Verify. The JOBS Act requires the SEC to establish reasonable steps that issuers must follow in order to verify the accredited investor status of investors who purchase securities in a Rule 506 offering in which the issuer employs general solicitation or general advertising.

NIBA believes that the rules to be promulgated by the SEC should be universally achievable by issuers of all size, whether Small Issuers or large and/or seasoned issuers. We believe that the rules promulgated should not raise more concerns and issues than the rules seek to resolve. As such, we request the SECs action to distinguish between reasonable steps to verify Accredited Investor (AI) status in offerings in which FINRA member firms act as placement agents, where such firms already have substantive due diligence and customer verification standards in place by existing Rules, versus offerings in which Issuers conduct offerings themselves, without the assistance of a FINRA member.

Further, the steps to verify should be clearly defined, indisputably reliable, relatively inexpensive, and expedient for the Issuer.

2. Distinction between Offerings conducted by Issuers that utilize a registered FINRA member Broker Dealer versus offerings that are self-conducted by issuers without Broker dealer involvement.

A) In Offerings that are self-conducted by an Issuer, without the assistance of FINRA member firms acting as placement agents, we believe that a cost effective, expedient and reliable manner of effecting the JOBS Act requirement would be for each Issuer to obtain a third party verification report from any one of a multitude of investigatory firms specializing in background checks and reports, specifically addressing only the information necessary to establish a potential investors Accredited status. This report would be ordered by the Issuer for each such potential investor prior to acceptance of any funds or subscription documents, and would be limited in scope only to the establishment by the investigative firm that that investor is, or is not, Accredited. Such reports could be provided within a few days, would cost less than any other method of verification, would provide only the conclusions and summary of what factors were utilized to establish the status, would not provide the Issuer with any Investor documentation (which avoids Privacy Act and Issuer retention of Investor records and documents issues or costs and further rulemaking), and would be reasonable and reliable in the manner in which the Issuer verified the status of each Investor, as such third party investigative firms have established reasonable methods and standards for the accumulation of such required information.

B) In Offerings in which Broker Dealers act as placement agents or underwriters, we believe that a cost effective, expedient and reliable manner of effecting the JOBS Act requirement would be for each Issuer to obtain a form from the BD, attached to each subscription agreement submitted to the Issuer for approval, that indicates the Process undertaken by the Broker Dealer to establish the investors Accredited status, and a representation that such process was completed within nine (9) months of the date of the potential investment. In this manner, since the Broker Dealer must currently undertake steps to comply with existing rules related to the establishment of AI status, suitability, and a host of other factors, a simple form provided by the Broker Dealer is not overly burdensome on the Broker Dealer, but provides the Issuer with the opportunity to review the representations on the form for completeness, accuracy and date that the information on the AI was last updated. This would constitute an adequate reasonableness test for the Issuer, as the Broker Dealer would already have the greater obligation related to its responsibilities to the Investor, yet the Issuer would still have the obligation of examining the forms for any inconsistencies or questionable representations.

3. Use or non- use of general solicitation and/or advertising in Regulation D private placement offerings. Issuers who choose not to utilize general solicitation and general advertising should not be subject to additional procedural burdens, including the to-be-defined reasonable steps to verify AI status (whether as requested above or otherwise). These Issuers should be able to utilize their currently existing procedures in conducting Rule 506 private offerings. Only Issuers that choose to utilize general solicitation and/or general advertising should be subject to verification of AI status.

4. Safe Harbor for Issuers. The JOBS Act does not address providing a safe harbor for issuers that follow reasonable steps to verify and inadvertently sell to a non-accredited investor. NIBA requests that the SEC adopt a Safe Harbor, wherein when a Issuer has followed the actions required by the SEC in the contemplated rulemaking, but later learns that an Investor was not Accredited, despite the Investors representations and reasonable verification at the time of the investment, that such unintentional acceptance of any such non-Accredited Investor would not cause any adverse action against the Issuer, the Broker Dealer, if applicable, and would not restrict the Issuers continued use of the ability to generally solicit and advertise Rule 506 offerings.

A Safe Harbor is essential to maintain an orderly market, and to afford more Issuers the opportunity intended by Congress. Without a Safe Harbor, fewer Issuers will risk the unknown consequences of inadvertent or Investor caused mistakes, and the mandate of Congress will not be effective in achieving its intent.
In essence, NIBA believes that solutions should not create more problems than they resolve.
We believe the requests made hereby are reasonable, cost effective, and are immediately achievable by both Issuers and, where and when applicable, Broker Dealers of all sizes.

Thank you for the opportunity to share our viewpoint related to these important issues.

Sincerely and Respectfully Submitted,

The Board of Directors of the National Investment Banking Association