NASAA Invites SEC to Examine How the Program Streamlines State Review of Small Business Capital Formation Offerings

• Download: NASAA Comment Letter

WASHINGTON, D.C. (February 12, 2015) – The North American Securities Administrators Association (NASAA) has filed a comment letter with the Securities and Exchange Commission (SEC) highlighting the effectiveness of NASAA’s new streamlined review program for small business securities offerings.

NASAA President and Washington Securities Director William Beatty documented in the letter the new service standards for state review of Regulation A offerings including increased speed and efficiency of these reviews.

“I strongly urge you to closely examine NASAA’s Coordinated Review Program and take note of the significant developments that have occurred since the Commission voted to propose its rule implementing changes to the rules governing Regulation A offerings,” Beatty wrote.

NASAA’s letter comes as the SEC continues to finalize its rule to implement Title IV of the JOBS Act. The Commission’s proposing release and subsequent public statements have emphasized the correlation between the cost and efficiency of state review of Regulation A offerings, and the legal and policy basis for the SEC’s contemplated regulatory preemption of state review authority of these offerings.

Beatty said NASAA is encouraging the SEC to examine the Coordinated Review Program’s success because at the time the agency issued its proposed rule, the review program was in its infancy. “Today, by contrast, there is a robust program in place that has been used for the filing and registration of Regulation A offerings in multiple states, even though the offering limit has not yet been raised for Regulation A offerings under Section 3(b)(2),” he wrote.

On January 30, 2015, the first issuer to participate in the program, Groundfloor Finance, Inc., received notification that its offering had been cleared in all NASAA jurisdictions where Groundfloor sought registration. Two additional multi-state offerings have subsequently been filed and are progressing as planned. “So far, in every instance, the Coordinated Review Program has met or exceeded the operational guidelines under which offerings are reviewed,” Beatty wrote.

“States have effectively and convincingly responded to questions surrounding the costs and efficiency in state registration of Regulation A offerings,” Beatty wrote. “State regulators enhanced their ability to deliver timely, useful and substantive comments by implementing the successful Coordinated Review Program, a robust and complementary framework for joint federal and state oversight of this new marketplace. In doing so, state regulators have shown that the Commission’s preemption proposal is not only unlawful . . . but also unnecessary and harmful to the marketplace by repudiating the new service standard created in the Coordinated Review Program.”

NASAA’s Coordinated Review Program, which is operational and effective in 46 states and 49 NASAA jurisdictions, streamlines state registration of offerings under both Section 3(b)(1) and 3(b)(2) of the Securities Act and allows for coordination between jurisdictions where an issuer files for registration. The program includes strict review and comment timeframes for participating states, generally no more than a total of 21 business days from start to finish for an offering with no application deficiencies. More information about NASAA’s program is available here.

“NASAA remains confident that, working together, the Commission and the states can maintain this efficient review cycle and new service standard for the benefit of filers and investors alike,” Beatty wrote.

The full text of President Beatty’s letter is available on the NASAA website here.

For More Information:
Bob Webster | Director of Communications
202-737-0900