November 19, 2015
I would like to thank you for reviewing and proposing updates to Rule 147. The proposed updates, when enacted, will provide a much improved and very workable model for small businesses to raise the capital needed to grow and create jobs in the communities they serve.
I implore the commission to leave the existing Rule 147 safe harbor to Section 3(a)(11) in place while adopting the proposed rules as the new Section 505.
By keeping the existing Rule 147 in place, states that have passed laws permitting and regulating Intrastate Crowdfunding will act as a testing ground for this new method of capital formation.
It had taken nearly two years to have this law enacted in my home state of Illinois and even longer in others. If the SEC removes rule 147 as a safe harbor under Section 3(a)(11) of the Securities Act of 1933 (the Act). The current Illinois Intrastate crowdfunding law would potentially be rendered useless.
It is clear that both the SEC and the states that have passed laws similar to that in Illinois are working towards the same worthy goal of providing a more efficient way for small businesses to obtain the capital required to operate, grow employment and create value.
My belief is that many states including Illinois will potentially take years to update the laws to function under any change to SEC regulation. It would cause states that have been forward thinking to start from scratch delaying potential opportunities for both small business and potential investors.
The proposed changes will be a huge improvement and go a long way in bringing these rules up to date with current business practices. In particular, the proposed change to the 80/80/80 rule with the modification to "or".
In addition the ability to advertise intrastate offerings without fear that crossing state lines will void an offering utilizing the exemption. These will be perfectly suited to be placed in the new Section 505.
This will allow issuers within states having an existing exemption to continue to explore and potentially use existing law, while state lawmakers determine how best to move forward and take advantage of the improved exemption in Section 505.
If you would like to further discuss any of the recommendations offered please feel free to contact me at the email address provided with my comment submission.