Comment Letter on the JOBS Act from the Forum for U.S. Securities Lawyers in London
Year 2 Project – Regulation S, Category 3 Year Two Project
Investment Company Act Section 3(c)(7) Model Procedures for Equity Issuances in the London Capital Markets
In July 2012 the Forum submitted a comment letter with respect to the rules the Securities and Exchange Commission (the “Commission”) is required to adopt pursuant to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). This letter was submitted in response to the Commission’s request for public comments relating to the JOBS Act rulemaking.
The Forum comment letter contained London and international focused comments including the effects of the lifting of the bans on general solicitation and general advertising on compliance with Regulation S as well as its interaction with certain aspects of Regulation D and Rule 144A offerings. In addition, the Forum Comment Letter included some novel points not raised in the other comment letters including the following:
The Forum requested that the SEC confirm that the use of general solicitation and general advertising is also permitted in any private placement in reliance on Section 4(2) of the Securities Act made solely to qualified institutional buyers or accredited investors, as the case may be.
The Forum requested that the SEC confirm any effect the Section 201 changes to general solicitation and general advertising will have on the permitted activities of unregistered foreign broker dealers under Rule 15a-6 under the Exchange Act.
The Forum notes that Section 105 of the JOBS Act relaxes the rules relating to research reports and other communications by analysts and broker dealers in connection with the IPOs of EGCs and prohibits the SEC and any national securities association from imposing restrictions on certain communications including research reports and that such broker dealer and analyst activities are also regulated by FINRA and urges the SEC to clarify the interaction of Section 105 with the FINRA rules applicable to such conduct.
The Forum recommends that the SEC review and increase the threshold for Exchange Act registration under Rule 12g3-2(a) as its current level of 300 U.S. resident shareholders is inconsistent with the increase in the overall Section 12(g) thresholds under the JOBS Act.