NASAA President Pushes for State Regulation of “Reg A Plus” and for Private Lawsuits Over Small Offerings

State Securities Regulators and others are battling over how the US Securities and Exchange Commission should create a $50 million offering cap for exempt offerings under regulation A. The Jumpstart Our Business Startups Act had ordered the SEC to establish the new exemption but gave no deadline. Referred to by SEC staff as “Reg A Plus,” the agency’s Division of Corporation Finance rulemaking team has been working on the measure.

In a letter, the North American Securities Administrators Association urged the regulator to refuse to succumb to some commenters’ requests that state securities regulators not be included when it comes to the new exempt offerings. NASAA believes that state regulator oversight is key to making sure that these offerings are part of a successful public marketplace.

The letter, written by NASAA President A. Health Abshure, was in response to comments calling on the Commission to define what is a “qualified purchaser” under the 1933 Securities Act so that new offerings (or at least part of them) would be exempt from state blue sky registration. Abshure believes that limited state oversight for the new exemption would make it easier for scammers to use this exemption. He also says that making the securities freely tradable could increase the chances of financial fraud and abuse, which is why state regulation is so important.

Meantime, NASAA also is pushing for changes to federal law so that private lawsuits involving small offerings are allowed. This too stems from new investment opportunities under the JOBS Act.

Under the JOBS Act, the SEC has been ordered to lift its general solicitation bar involving certain private placements and set up a new regulatory regime for crowdfunded securities. Abshure says NASAA is worried that there aren’t enough civil remedies for investors that are harmed because the arbitration agreements prevents securities lawsuits.

State securities regulators are likely to press for more restrictions to class actions and Abshure wants the SEC to use its power under the Dodd-Frank Act to limit or prohibit mandatory predispute arbitration agreements. He also is calling for a uniform fiduciary standard for investment advisers and broker dealers. Abshure said that imposing a uniform high standard of behavior for advisers and broker-dealers would only build investor confidence in the financial services industry and its products.

If you are an investor who has suffered losses and you suspect that securities fraud was involved, your best chances for recouping losses are by working with an experience institutional investor fraud law firm. Contact Shepherd Smith Edwards and Kantas, LTD LLP today. The sooner you begin exploring your options, the more time your securities lawyer has to work on your arbitration claim or lawsuit.

The JOBS Act (PDF)

North American Securities Administrators Association

More Blog Posts:
SEC Working to Create $50M Reg A Offering Cap to Commissioners ASAP, Institutional Investor Securities Blog, December 8, 2012

If SEC JOBS Act Rule 506 Proposal is Made Final, Legal Challenges Are Likely, Institutional Investor Securities Blog, October 27, 2012

Investment Opportunities to Get More Advertising Exposure Because of JOBS Act Mandate Lifting Ban on General Solicitation, Stockbroker Fraud Blog, January 29, 2013