Two prominent members of the Financial Services Committee, Ranking Member Maxine Waters (D-CA) and Congressman Stephen Lynch (D-MA), are calling on the Securities and Exchange Commission (SEC) to study the North American Securities Administrators Association’s (NASAA) new Coordinated Review program, and not “undermine crucial investor protections by preempting the states’ regulators.”
The lawmakers pointed to a comment letter by Groundfloor Finance Inc., the first securities issuer to participate in the Coordinated Review, which “strongly disagrees” with the SEC’s proposal to preempt state law. The rule, known as Regulation A+, has been proposed to implement Title IV of the Jumpstart Our Business Startups Act of 2012, which directs the SEC to adopt rules creating a streamlined process for public offerings of up to $50 million.
The letter follows a June letter from Waters and Lynch and 18 other members, which expressed “serious concern about the sweeping preemption of state law” proposed by the SEC as part of the Regulation.
Text of the letter is available below. A link to the signed copy, and Groundfloors’s comment, letter is online.
December 4, 2014
The Honorable Mary Jo White, Chair
U.S. Securities and Exchange Commission
100 F Street, NE Washington, D.C. 20549
Dear Chair White:
You received a comment letter (enclosed) from Groundfloor Finance Inc. regarding the Securities and Exchange Commission’s (SEC) proposed Regulation A+ rule (Release No.33-9497) and Groundfloor’s concerns with the SEC’s potential preemption of state law. As the first issuer to participate in the North American Securities Administrators Association’s (NASAA) new Coordinated Review program, Groundfloor wrote that they “have found value in participating in the Coordinated Review program, and believe that other issuers will find the same.”
In passing Title IV of the Jumpstart Our Business Startups Act of 2012, Congress balanced the need to promote small business capital formation by tailoring the public offering process, while preserving strong investor protections, including state regulator oversight for securities sold to retail investors. The state regulators have now done the same, by streamlining their own registration processes. Groundfloor notes that “Combined state and federal registration along with the new Coordinated Review program presents a threshold that legitimate businesses can meet, while creating a disincentive for speculative and unscrupulous issuers.”
We strongly urge you to closely examine NASAA’s Coordinated Review program, and not undermine crucial investor protections by preempting the states’ regulators.
Stephen F. Lynch
Member of Congress
Commissioner Luis A. Aguilar
Commissioner Daniel M. Gallagher
Commissioner Kara M. Stein
Commissioner Michael S. Piwowar