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SEC postpones interim Reg D rules

The Securities and Exchange Commission will now hear public opinion on general solicitation rules after receiving several letters urging it to avoid acting in haste over the JOBS Act.


Mary Schapiro, chairman of the US Securities and Exchange Commission (SEC), will not introduce interim Regulation D rules on Wednesday after several stakeholders insisted on a public consultation.

The SEC had been urged not to adopt interim general solicitation rules for the Jumpstart Our Business Startups (JOBS) Act without first asking for public comments on specific proposals. The revised rules, which will allow GPs to publicly advertise and market their funds, were expected to be issued on an interim basis at the Commission’s 22 August meeting. However, Schapiro told congressional lawmakers that she plans to listen to comments on a proposed repeal of the solicitation ban before finalising the rules, which is expected to happen sometime next year.

SEC spokesman John Nester said the 90-day deadline did not provide a “realistic timeframe” for drafting and analysing a new rule, which also entails a a lengthy review process by the Commission and the need to accept public feedback on the rulemaking process. “The chairman believes it is important for the general solicitation rule to be proposed for public comment, as is our typical practice in rulemaking. This transparent process will provide the opportunity for feedback from companies, investors and market participants who may be impacted by the final rule,” he added.

The North American Securities Administrators Association and Americans for Financial Reform (in tandem with former SEC employees) had written to the SEC warning that introducing interim rules could have a damaging affect for investors.

In the letter from the Americans for Financial Reform, the group said it feared “the very real risk of an upsurge in abusive private equity and hedge fund advertising and marketing practices based on misleading performance claims.” It also urged SEC chairman Mary Schapiro to “stand up against pressure to move forward with rulemaking in a hasty and reckless fashion and to demand a full opportunity for public comment and consideration of the potential impact on investors before proceeding with rulemaking in this area.”

The SEC had set 22 August to finalise the general solicitation rule, having previously missed its 5 July deadline.