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SEC Seeks Comment on Broadening Investor Access to Private Placements

June 20, 2019

The SEC is reevaluating who should have access to private placements as well as how that access should be granted, according to news reports.

The regulator issued a concept release on June 18 seeking comments on exemptions from registration on certain investment offerings, ThinkAdvisor writes. The SEC is specifically looking for feedback “from startups, entrepreneurs and investors who have firsthand experience” with the regulator’s framework, said SEC Chairman Jay Clayton, according to the publication.

“We believe our capital markets would benefit from a comprehensive review of the design and scope of our framework for offerings that are exempt from registration,” the SEC said, according to ThinkAdvisor. “More specifically, we also believe that issuers and investors could benefit from a framework that is more consistent and addresses gaps and complexities.”

The regulator wants to reassess the limitations on who can invest in certain exempt offerings and the amounts they can allocate while still ensuring investor protection and easing capital formation, the publication writes. The SEC is also considering allowing companies to use pooled investment funds to boost their ability to raise capital, according to ThinkAdvisor. At the same time, the regulator wants input on whether retail investors should be granted easier access to “growth-stage companies” through such funds, the publication writes.

Jay Clayton

Were the SEC to grant retail investors greater access to private funds, “this would have a dramatic impact on the entire retail market and would allow individual retirement savers to select investment options that have traditionally been limited to defined benefit pension plans,” said Josh Lichtenstein, a partner at Ropes & Gray, according to ThinkAdvisor.

The comment period is open for 90 days from the date of publication of the concept release, the publication writes.

By Alex Padalka
  • To read the ThinkAdvisor article cited in this story, click here.