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Members of Congress Agree: Reg A+ Rules Need National Standard

September 26, 2014
We’ve written before about the importance of implementing Title IV of the JOBS Act (commonly referred to as the “Reg A+” provision) in a way that will best encourage biotech capital formation. BIO President and CEO Jim Greenwood also discussed the issue in an op-ed at Forbes last week.

At issue is whether the SEC will set a national standard for the review of Reg A+ offerings or instead subject companies to the labyrinth that is state-level securities law. BIO strongly believes that Reg A+ will best encourage biotech investment and capital formation if the SEC decides to set a national standard in their final rule for implementing Title IV.

Yesterday, a large group of Republican lawmakers on the House Financial Services Committee sent a letter to the SEC requesting that they do just that. The lawmakers state:
"As you know, preemption of state registration is judicious and necessary for Reg A+ to meaningfully modernize our capital markets and level the playing field for American early-stage enterprises. Specifically, preemption for Reg A+ securities provides for a consistency of regulation for national offerings. As a result, small and medium-sized businesses would be able to undertake Reg A+ offerings while avoiding the prohibitively expensive complexities of complying with up to 50 different state regulators and associated regulations."

The lawmakers also responded to proposals put forth by some to streamline state regulations in an effort to reduce the burden of compliance:
"Moreover, although we recognize the recent and well-intentioned efforts of state securities regulators to streamling state registration, any such design still fails to sufficiently provide issuers with a timely, cost-efficient and reasonable process to raise capital. Furthermore, the existence of state merit review unnecessarily adds material uncertainty that hinders the objective of the JOBS Act and, altogether, may deter small enterprises from pursuing a Reg A+ offering."

The full letter may be viewed here.