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Statement at Open Meeting on Adoption of Regulation A Amendments

Commissioner Michael S. Piwowar

March 25, 2015

Thank you, Chair White. I am pleased that we are adopting amendments to Regulation A to implement Title IV of the Jumpstart Our Business Startups Act, or JOBS Act. Title IV was enacted to facilitate capital formation by small and emerging businesses. Today’s amendments were rooted in a bipartisan bill, championed by Senator Pat Toomey of Pennsylvania and Senator Jon Tester of Montana. So it is quite appropriate — nearly three years after the President signed the JOBS Act into law on April 5, 2012 — for the bipartisan Commission to finally adopt the implementing regulations.

Keeping in mind the criticisms of current Regulation A, as thoroughly documented in a report by the Government Accountability Office,[1] the amendments we are adopting today will provide small businesses with additional options for raising capital. Although today’s release is not exactly my preferred approach, it is nonetheless a consensus approach that all of the Commissioners can agree fulfills the statutory mandate in a manner consistent with our core mission. In my opening remarks at the proposal stage, I raised the issue as to whether we might consider a new regulatory model in which an issuer could seek qualification of a Regulation A offering from either the Commission or a state securities regulator.[2] I thank Commissioner Stein for working closely with me on the development of this alternative.

With respect to our action today in particular, the new rules will allow an issuer a choice to conduct either a Tier 1 or Tier 2 offering for amounts up to $20 million. This approach will afford the Commission an opportunity to observe choices among issuers as to which approach is more likely to be taken. Moreover, the increased Tier 1 offering level will afford the potential opportunity for state securities regulators to be involved in more offerings under new Regulation A through their new coordinated review program. I thank Commissioner Aguilar for starting the conversation about increasing the maximum Tier 1 offering level, without sacrificing any investor protection, and Commissioner Stein for suggesting the components of a retrospective review that will help the Commission determine whether to adjust the offering limit for Tier 1 in the future.

Our capital formation efforts for small business, however, should not, and will not, stop here. I hope that we will soon consider further expansion of Rule 504 under Regulation D as well as potential exemptive relief under the intrastate exemption to allow for regional crowdfunding conducted pursuant to state securities laws.

Finally, I would like to thank the staff from the Division of Corporation Finance, the Division of Economic and Risk Analysis, the Office of the General Counsel, and others for their efforts in finalizing today’s release. I also greatly appreciate the efforts of my fellow commissioners to finalize these amendments. I have no questions and I support the staff’s recommendation.

[1] U.S. Government Accountability Office, Securities Regulation: Factors That May Affect Trends in Regulation A Offerings (July 2012).

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