Capital Raising in the U.S.: An Analysis of the Market for Unregistered Securities Offerings, 2009-2014
Oct. 29, 2015
Scott Bauguess, Rachita Gullapalli, and Vladimir Ivanov
Capital formation through private placement of securities has increased substantially since the onset of the financial crisis. Amounts raised through unregistered securities offerings have outpaced the level of capital formation through registered securities offerings during recent years, and totaled more than $2 trillion during 2014. In this analysis, we provide insights into a large segment of the unregistered securities market: offerings conducted in reliance on Regulation D of the Securities Act. Using information collected from Form D filings, this study provides a detailed examination of offering characteristics, including the types of issuers, investors, and financial intermediaries that participate in the offerings. As part of the examination, we analyze the new Rule 506(c) exemption which became effective in September 2013 and allows general solicitation and general advertising, reversing almost 80 years of regulatory practice. We also provide some perspective on the state of competition and potential regulatory burden in alternate capital markets by analyzing the level of activity among the various registered and unregistered offering alternatives.
 As used throughout the study, the term “market” refers to capital markets in general, and, where discussed in the context of a specific rule, relates to the provisions of the relevant exemption or safe harbor.