hearing, regulation A has not proved to be a useful capital raising vehicle for small issuers. It was used only a total of 78 times during the 10-year period between 1995 and 2004. An average of eight filings a year with the maximum amount of $5 million each really proves the irrelevance of regulation A in today’s economy. It’s simply not a viable vehicle as currently structured.”).
33 See Small Offering Exemption, Securities Act Release No. 5997, 1978 WL 171024 (November 16 1978) (proposed amendment dealing with firm underwriting); see also Small Business Initiatives, Securities Act Release No. 6949, 1992 WL 188930 (July 30, 1992).
34 See, e.g., Lawmakers Propose Raising Regulation A Offering Limit, PIPES REP. (December 21 2010).
35 Some states offer “coordinated review” (“CR”), allowing issuers to receive the comments from one CR office even though the Regulation A offering is to be conducted in several states, which reduces the review process and costs. CR-SCOR is a program that “provides for coordinated review of an offering of securities in two or more states located within a geographic group when the offering is intended to be made in reliance upon an exemption from registration with the US Securities and Exchange Commission (SEC) under Rule 504 of SEC Regulation D or SEC Regulation A.” CR-SCOR,
www.coordinatedreview.org/crscor.html (last visited October 7 2011). New York, California, and Florida are not participating in the CR-SCOR programme.
36 Securities Act § 18(b), 15 USC § 18(b). 37 National Securities Market Improvement Act of 1996, Pub. L. No. 104-290, 110 Stat. 3435 (October 11 1996). NSMIA preempts state qualification and registration requirements for “covered securities,” which includes issuer offerings of securities listed on Nasdaq or the NYSE and securities exempt from registration under federal securities law, including pursuant to rules promulgated under section4(a)(2) of the Securities Act.
38 Rules 504 and 505 were promulgated under section 3(b) of the Securities Act and do not preempt state securities law requirements. However, most states have adopted changes to their state securities laws that essentially duplicate the provisions of Regulation D.
39 See 29th ANNUAL SEC GOVERNMENT- BUSINESS FORUM ON SMALL BUSINESS
CAPITAL FORMATION, RECORD OF PROCEEDINGS (November 18 2010) (statement of David Hirschmann, President and CEO of the Center for Capital Markets Competitiveness at the US Chamber of Commerce).
40 See 2009 ANNUAL SEC GOVERNMENT- BUSINESS FORUM ON SMALL BUSINESS CAPITAL FORMATION 17 (2009).
41 See Statement of William R. Hambrecht, Chairman & Chief Exec. Officer, WR Hambrecht + Co.) (“According to public records, since 2005 there have only been 153 Reg A filings and of those 153, an astoundingly low number of 13 have actually priced.”).
42 Hearing on Capital Formation Before the S. Subcomm. on Small Business, 95th Cong. 589 (1978) (statement of Sen. Lowell Welcker).
43 See A Proposal to Increase the Offering Limit Under SEC Regulation A: Hearing Before the H. Comm. on Fin. Servs., 111th Cong. 3 (2010) (statement of Rep. Anna Eshoo, Member of Congress, Cal.) (“The main problem is that hardly anybody uses it. Currently, there is little incentive to support the small initial public offerings under Regulation A. In fact, the current regulations are a disincentive, burdening a $5 million offering with $1 million to $2 million in underwriting expenses. So that is a pretty good reason why people aren’t using it.”).
44 Smaller IPOs suffered a “rapid decline” from 1996 to 2000. Before 1996 there was an average of 520 IPOs per year, after 2000 there was only an average of 134 IPOs per year. DAVID WEILD & EDWARD KIM, WHY ARE IPOS IN THE ICU, 3, 7 (Grant Thorton 2008), available at
www.grantthornton.com/staticfiles/GTCom/files/G T%20Thinking/IPO%20white%20paper/Why%20 are%20IPOs%20in%20the%20ICU_11_19.pdf.
45 See A Proposal to Increase the Offering Limit Under SEC Regulation A: Hearing Before the H. Comm. on Fin. Servs., 111th Cong. 32 (2010) (prepared statement of William R. Hambrecht, Chairman & Chief Exec. Officer, WR Hambrecht + Co.).
46 See statement of Rep. Anna G. Eshoo, Member of Congress, Cal.
47 See Small Company Capital Formation Act of 2011, HR 1070, 112th Cong. (1st Sess. 2011).
48 See Press Release, Fin. Servs. Comm., Administration Could Help Small Business Gain Access to Capital by Helping Pass the Small Company Capital Formation Act (March 22 2011), available at
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