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Statement at Open Meeting on Adoption of Updated Rules regarding Intrastate Offerings and Small Business Capital Formation

Commissioner Michael S. Piwowar

Oct. 26, 2016

Thank you, Chair White.  Today’s adopting release is a well-crafted and thoughtful adoption of the Commission’s proposal to modernize and improve our rules related to intrastate offerings and Rule 504 offerings.  I echo the thanks of my fellow commissioners for the efforts by our staff, including a number whose experiences as former state securities regulators were quite helpful. 

I also thank the members and staff of the North American Securities Administrators Association, whose input, including through their participation with our Investor Advisory Committee, has been invaluable.  I would also like to recognize the members of our Advisory Committee on Small and Emerging Companies for their 2015 recommendation to modernize Rule 147 to facilitate state-based crowdfunding initiatives.[1]  Finally, I thank those who commented on our proposal on behalf of small businesses and individual investors.

I voted against the original proposal from the Commission.[2]  In particular, there were two provisions with which I strongly disagreed.  First, I objected to the continued use of percentage thresholds as a component of a method for determining the intrastate nature of an issuer.  Second, I objected to part of proposed new Rule 147 that holds if an offering is conducted pursuant to an exemption from state law registration, the offering must be limited to no more than $5 million in a twelve-month period and must impose an investment limitation on investors.

Fortunately, commenters were helpful in pointing us in the right direction on both issues.  First, after reviewing the public comments, I am satisfied that the four part disjunctive test as a quantitative threshold for determining whether an issuer is located in-state is sufficiently workable for purposes of the intrastate offering rules and is a substantial improvement over the current test.

Second, a large number of commenters opposed the imposition of substantive federal requirements on intrastate offerings.[3]  In fact, not one commenter wrote to support such restrictions.  This result should not be surprising because state securities regulators have been vigorously enforcing blue sky laws well before the creation of the Commission.  Today’s adoption properly views them as important and capable partners in facilitating capital formation and protecting investors.

I enthusiastically support the adoption of the release and have no questions.


[1] See Securities and Exchange Commission Advisory Committee on Small and Emerging Companies “Recommendation to Modernize Rule 147 under the Securities Act of 1933” (Sept. 23, 2015), available at

[2] See Commissioner Michael S. Piwowar “Dissenting Statement at Open Meeting on Crowdfunding and Small Business Capital Formation” (Oct. 20, 2015), available at

[3] Adopting Release, at 57, n. 201.

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