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SEC Approach to JOBS Act Creates Confusion

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The textbook theory behind American governance describes the process like this: Congress passes a law regulating a field of endeavor and authorizing a regulatory agency to "fill in the gaps" by adopting regulations that will clarify where the boundaries lie between permitted and prohibited behavior.

Unfortunately, the SEC's approach to implementing portions of the JOBS Act relating to private sales of securities seems to have gotten it backwards.

On July 10, 2013 the SEC issued three releases relating to sales of private securities pursuant to the JOBS Act. Two of those releases adopted regulatory changes that will become effective on September 23, 2013. A third release, however, merely proposed changes and that proposal is open for public comments until September 23, 2013. All three releases pertain to the sale of securities in private transactions under the SEC's Regulation D and they are creating a great deal of confusion in the market.

This analysis tries to sort out the confusion.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.