Download: Letter to President Biden Regarding Securities Laws and Economic Stimulus Legislation

WASHINGTON, D.C. (January 22, 2021) – Investor protection advocates including state securities regulators, legal scholars and investor and consumer advocacy organizations urged the Biden Administration not to weaken securities laws through the further expansion and deregulation of the private offering marketplace.

“As you undertake critically important efforts to stimulate the economy, we urge you to actively oppose the inclusion of any provisions that would expand or codify any proposed or adopted securities registration exemptions, and instead focus on restoring market information and efficiency,” the letter’s 15 participants wrote to President Joseph Biden.

The letter explains that while policymakers are in an ongoing debate about the appropriate balance between the public and the private securities marketplace “it would be a mistake to prejudge or short-circuit this overdue discussion by rushing it into any stimulus legislation.”

The letter also affirms the importance of economic stimulus legislation, including legislation to assist small businesses. However, it makes the important point that “the premise that relaxation of the securities laws will encourage investment in small and emerging companies has time-and-again proven incorrect.”

“Instead of repeating the mistakes of the past and pursuing further deregulation of private or small-sized quasi-private securities offerings without evaluating the risks or benefits of these actions, your Administration should immediately place a ‘pause’ on the further expansion and deregulation of the private offering marketplace,” the letter said. “The Administration should use that pause to study the impact of the expansion of private offering exemptions on the protection of investors, the state of our public markets, and the health of the overall economy.”

The letter also calls on the Biden Administration to reverse recent policies that have tended to remove regulatory requirements on issuers to the detriment of transparency, market efficiency, and ultimately most “mom and pop” investors.

“In developing its policy response, your Administration should commit, from Day 1, to giving at least equal consideration and attention to the expectations and needs of retail investors who, because of the expansion of private markets, are increasingly directly exposed to the risks of these markets.”

The letter is available on the NASAA website, here.

Signatories to the letter include the North American Securities Administrators Association, Consumer Federation of America, Healthy Markets Association, Better Markets, Public Investors Advocate Bar Association, Public Citizen, Americans for Financial Reform, Ceres Accelerator for Sustainable Capital Markets, and the Institute for Agriculture and Trade Policy. The academics who signed the letter in an individual capacity include Renee M. Jones, Associate Dean for Academic Affairs, Professor of Law, and Thomas F. Carney Scholar, Boston College Law School; Elisabeth de Fontenay, Professor of Law, Duke University School of Law; James D. Cox, Brainerd Currie Professor of Law, Duke University School of Law; Urska Velikonja, Professor of Law, Georgetown University Law Center; Erik Gerding, Professor of Law, University of Colorado Law School, and Patricia A. McCoy, Professor of Law, Boston College Law School.