Wednesday, April 11, 2012

SEC Sets Up Public Comment Mechanism Ahead of JOBS Act Rulemaking

Similar to the rulemaking under the Dodd-Frank Act, the SEC will accept public comments as the Commission sets out to make rules required under the recently enacted Jumpstart Our Business Startups (JOBS) Act. Under a process first utilized with the Dodd Frank Act, the public will be able to comment before the SEC even proposes its regulatory reform rules and amendments. The SEC is generally required by law to establish a public comment period at the time it proposes rules or rule amendments. However, similar to the Commission’s action with the Dodd-Frank Act, the public will have an opportunity to voice its views before rules or amendments are proposed under the JOBS Act. The public also will be able to see what others are saying to the agency about these issues.

In addition, to ensure full transparency, the SEC will post information on its website about any JOBS Act meetings with interested parties. SEC staff will request that meeting participants provide an agenda of intended topics in advance, which will become part of the public record. Meeting participants will be encouraged to submit written comments to the public file so that all interested parties have the opportunity to review and consider the views expressed.

To facilitate public comment, the SEC is providing a series of links on its website organized by JOBS Act titles. The JOBS Act has seven titles, dealing with an IPO on-ramp for emerging growth companies, crowdfunding, the easing of the Regulation D general solicitation ban, raising the Regulation A trigger cap to $50 million, raising the 500-shareholder public reporting threshold for companies and community banks, and SEC outreach.

The SEC must, among other things, revise Rule 506 of Regulation D and Rule 144A. within 90 days of enactment; and adopt regulations implementing the Act’s crowdfunding title, including disqualification provisions, within 270 days of enactment.

In a March 13, 2012 letter to the Senate Banking Committee, SEC Chair Mary Schapiro said that the JOBS Act requires a series of new, significant SEC rulemakings with time limits that are not achievable. She noted that the rulemaking for the crowdfunding section has a deadline of 180 days. Chairman Schapiro said the time frame is too short to develop proposed rules, perform the required analysis, solicit, review and analyze public comments, and adopt final rules. The SEC Chair said that a deadline of 18 months would be more appropriate for rules of this magnitude. The enacted version of the JOBS Act raised the time limit from 180 days to 270 days, still below the 18 months suggested by the Chair.