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U.S. Securities and Exchange Commission

Speech by SEC Staff:
Opening Statement of the Division of Corporation Finance Regarding Electronic Filing and Revision of Form D


Corey A. Jennings

Attorney-Adviser, Division of Corporation Finance
U.S. Securities and Exchange Commission

Washington, D.C.
December 11, 2007

Good morning.

Today we are recommending that the Commission adopt amendments to mandate electronic filing of Form D information with the Commission and revise Form D’s information requirements. These recommendations are based on proposals made in a release approved by the Commission at an open meeting on May 23, 2007 and published on June 29, 2007. It was one of a series of six releases designed to modernize and improve the Commission’s capital raising and reporting requirements, with a focus on those applicable to small business.

Form D is a notice required to be filed by companies that have sold securities without registration under the Securities Act of 1933 based on a claim of exemption under Regulation D promulgated under the Act, or Section 4(6) of the Act. Most states also require Form D filings.

The Commission adopted Form D originally in 1982, in connection with the adoption of Regulation D. Regulation D was adopted as a series of rules designed to simplify then existing rules and to eliminate unnecessary restrictions placed on issuers of securities in private and other limited offerings, particularly small businesses. The Commission re-adopted Form D in 1986 as a uniform form that could be filed with both the Commission and with state securities regulators.

Form D filings produce data that can be used to evaluate the effectiveness of Regulation D as a capital raising device. The Commission and state securities regulators also use Form D data as an enforcement tool in protecting investors.

Form D calls for information concerning the offering in which the securities were sold, the issuer of the securities, and the exemption claimed. Currently, issuers must make Form D filings on paper. Form D is one of the Commission’s few remaining paper filings, the second most common paper filing made with the Commission, after Form 144. The Commission receives approximately 28,000 Form D filings per year. Approximately 95% of these are made by private companies, many of them small businesses.

We recommend that the Commission adopt rule amendments mandating the electronic filing of Form D information with the Commission online, through the Internet. The data filed would be available on our Web site. It would be interactive and searchable by regulators and members of the public.

The staff of the Division of Corporation Finance is exploring with representatives of NASAA, the North American Securities Administrators Association, the organization of state securities regulators, the possibility of linking the Commission’s Form D filing Web site to a site to be sponsored by NASAA, so that Form D filers could make both their SEC and state filings in one transaction. This possibility is called “one-stop filing” in the release we are recommending for adoption. One-stop filing offers the prospect of reducing significantly the costs and burdens of preparing and filing Form D information with the Commission and with state securities regulators.

We also recommend that the Commission adopt revisions to the Form D information requirements. The revisions would simplify and restructure the requirements and add plain English instructions. The revisions are intended to assure that the information collected through Form D filings is useful to regulators and not unduly burdensome for filers to provide. The revisions also answer many of the interpretive questions that have arisen with respect to the Form D filing requirements.

The Commission received a number of thoughtful and very helpful comment letters on its proposals to revise the Form D information requirements, including some from state securities regulators, our partners in protecting United States investors. All of the letters that discussed one-stop filing supported the idea. Some of the comment letters expressed divergent views on the Form D information requirements. In designing our recommendations in this area, we have sought to strike the appropriate balance between requiring useful information and not unduly burdening Form D filers, especially small businesses.

Our recommendation is that the Commission set September 15, 2008 as the effective date of the Form D amendments. As of that date, filers would be permitted to file the information required by the revised Form D electronically on a voluntary basis during a transition period of up to six months. After the transition period, beginning March 16, 2009, filers would be required to submit the new form electronically online, through the Internet.

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Thank you, Mr. Chairman. The Division of Corporation Finance would be happy to answer any questions you and the other Commissioners may have about these recommendations.



Modified: 12/11/2007