New Small Offering Exemption Subject of Petition

Thanks to my friend Lee Liebolt I have learned that the Sustainable Economies Law Center, based in Oakland, CA, has submitted a petition for rulemaking to the SEC. This petition suggests that offerings of $100,000 or less where each investor puts in no more than $100.00 be exempt from SEC and state registration.

Some of this seems to have come from various websites that seek to aggregate small investors into small offerings for small companies. This “crowd funding” concept (I have written about this previously) has begun to pick up steam, but requires much SEC oversight.

The petition argues that current exemptions for intrastate offerings, Regulation D and Regulation A are insufficient. In particular, it appears the petitioners want state “blue sky” or state securities law exemption as well. Plus other exemptions require substantial disclosure documents or that investors be sophisticated. The theory here is that for $100 investment, we should not have to worry too much about all that stuff as compared with the benefit for small businesses which provide 2/3 of all new jobs in our country.

I think it’s a cool idea. Heck if Rule 504 under Regulation D permits raising up to $1 million with no federal registration, and shares become publicly tradable thereafter, why not allow this? In fact, if I were the SELC I would consider upping the maximum investment, maybe to $1,000. Anyway, I’ll let you know if I hear of anything more on this petition.

Good luck to the SELC!

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