Page 5 - 2013_2014 NASAA report

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. . . . . & Investor Protection

Drawing upon our experience with

small businesses that want to Te JOBS Act recognized the strong investor protection role
create jobs, states are committed to provided by state securities regulators in reviewing Regulation
A oferings as part of the registration process.
exploring innovative ways to foster State securities regulators have particular strengths that
small business capital formation. uniquely qualify them to efectively oversee Regulation A
oferings. Because we are geographically close and accessible
Enhancing Capital Formation to investors, states are in a better position than the SEC to
communicate with both small business issuers and investors to
NASAA members are innovators when it comes to helping
ensure that this exemption is not abused. Moreover, the states
small businesses throughout North America raise investment
are most familiar with the local economic factors that afect
capital. NASAA shares the desire of policymakers in the
small businesses and states have a strong interest in protecting
United States and Canada for economic improvement by, in
investors in these types of oferings.
part, spurring private investment in small business. We believe
Given the risky nature of investments in startups, and
this goal is best achieved through restoring investor confdence
the fact that the states have traditionally been the primary
and implementing laws with a balanced approach that refects
regulator of small oferings, NASAA believes state oversight
smarter regulation.
of these oferings is essential. However, we recognize the
NASAA members serve as the primary regulators of
need to change some of our long-standing policies to make
most small company securities But our experience with investors Regulation A successful.
oferings. As such, NASAA NASAA members have no interest
members regularly work with tells us that we also need to create in throwing up needless barriers to
an environment in which investors economic development.
and assist local businesses
seeking capital to grow their feel sufficiently protected. Toward that end, NASAA
companies. To that end, NASAA
consulted with a task force of the
has embarked upon a campaign
American Bar Association to develop a streamlined multi-
for smarter regulation regulation that takes advantage of
state program that peels back some of our normal guidelines
technology to make the ofering process more efcient for
to accommodate this new type of ofering.
small businesses without sacrifcing important protections for
As part of the program, NASAA has designed a multi-state
investors.
review process in which one or two states will take a lead role
A frst step in this direction involves modernizing
in reviewing a registration application and working through
Regulation A.
any defciencies with the company issuing the securities in a
When a company wants to raise capital by selling securities,
set timeframe.
the company must frst register those securities with the
NASAA developed this program to help ease regulatory
government unless the securities are sold in a way that
compliance costs on small companies seeking to raise capital.
qualifes for an exemption from the registration process. Title
NASAA also is developing a multi-state electronic fling
IV of the JOBS Act requires the SEC to adopt a rule to
platform that will allow one-stop fling with all states, and we
provide an exemption for certain oferings up to $50 million.
intend to enhance the system to accommodate Regulation A
Under the JOBS Act, these oferings will be exempt
oferings.
from SEC registration under the new Section 3(b)(2) of The goal is to balance the legitimate
the Securities Act of 1933, but they would be subject to
registration at the state level unless the securities are listed on interests of investors with the
legitimate goals of entrepreneurs,and
a national securities exchange or sold to a qualifed purchaser
as defned by the SEC.
to adopt policies that are fair to both.
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