Statement on the Harmonization Proposal
March 4, 2020
I am happy to vote in favor of this proposal.
Over the years, and particularly since the Jumpstart Our Business Startups Act of 2012, several exemptions from registration have been introduced, expanded, or otherwise revised. As a result, the overall framework for exempt offerings has changed significantly.
I believe our capital markets will benefit from this comprehensive review of the design and scope of our framework for offerings that are exempt from registration. I also believe that issuers and investors could benefit from a framework that is more consistent, with fewer gaps and complexities than the one we have today. The comments received in response to the SEC’s Concept Release on Harmonization of Securities Offering Exemptions have provided information on possible ways to simplify and improve the exempt offering framework to promote capital formation while preserving appropriate investor protections. I commend the SEC staff for undertaking the task of reviewing those comments and proposing a path forward that would streamline and tailor the exempt offering framework for businesses seeking to raise capital.
I state often that we must encourage and facilitate the entrance of companies to our capital markets, and I think the SEC’s work to update our regulations relating to private offerings can help accomplish that. This proposal is based on our study of the different profiles and needs of companies raising money in our private markets and how the current exemptions are utilized.
My vote is not intended to expand the private markets, but to simplify and adjust our exempt offering framework with the hope that the proposed changes will make it easier for private companies to transition to public companies. Encouraging and enabling issuers to raise capital in our private markets earlier may result in them raising money in our public markets at an earlier growth stage than we presently see. This, in turn, could allow Main Street investors to invest in public companies that have more growth potential.
I recognize that there are some companies who, for whatever reason, choose to stay private. These companies still provide a great contribution to our economy and are entitled to offering rules that work well for them and their investors.
Thank you very much to everyone in the Division of Corporation Finance who worked so hard on this proposal. A special thank you to Jennifer Zepralka and her team for their dedication to this project. Thank you also to Martha Miller, Jennifer Riegel, and everyone in the Office of the Advocate for Small Business Capital Formation. This group has pounded the pavement and helped to inform this proposal with input gained from the Small Business Capital Formation Advisory Committee, the Government-Business Forum on Small Business Capital Formation, and from meetings with entrepreneurs and small businesses across the country.