Interesting New Comment to SEC Proposals: Reduce the Regulation S Holding Period
I noticed that a lawyer has posted a comment to the SEC proposal to change the holding periods for Rule 144 suggesting that Regulation S also be amended to reduce the holding periods there to six months from one year.
As many of you know, Regulation S was passed originally to ease the process of capital formation when the money is being raised outside the US and in other circumstances. It became controversial when a poorly drafted section was interpreted to allow public resale in the US just 41 days after issuing stock. In fact, some say the modern PIPE market was born in Reg S deals at this time. The SEC dealt with the problem (after awhile) by changing the period to one year; at the time suggesting it should be parallel with the holding periods under Rule 144.
Thus, says the commenter, Regulation S should continue to be parallel, so if you are changing Rule 144, Reg S also should have a reduced holding period. Makes sense to me. Anything that eases the regulatory burden without encouraging bad guys is probably a good thing. We'll see if the SEC Staff responds on this point.
As many of you know, Regulation S was passed originally to ease the process of capital formation when the money is being raised outside the US and in other circumstances. It became controversial when a poorly drafted section was interpreted to allow public resale in the US just 41 days after issuing stock. In fact, some say the modern PIPE market was born in Reg S deals at this time. The SEC dealt with the problem (after awhile) by changing the period to one year; at the time suggesting it should be parallel with the holding periods under Rule 144.
Thus, says the commenter, Regulation S should continue to be parallel, so if you are changing Rule 144, Reg S also should have a reduced holding period. Makes sense to me. Anything that eases the regulatory burden without encouraging bad guys is probably a good thing. We'll see if the SEC Staff responds on this point.
Labels: SEC
posted by David N. Feldman at
8/20/2007 06:34:00 AM
1 Comments:
Interesting point about the Regulation S should continue to be parallel, so if you are changing Rule 144, Reg S also should have a reduced holding period.
I know you disagree with the Rule 144 holding periods should not be reduced as per the SEC proposal and investors will be less protected even though capital formation will be enhanced. Would like to hear more of your thoughts on this.
Rule 144 Specialist
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