US Treasury Report Outlines Ways to Boost Capital Markets
A new report from The US Department of Treasury looks at ways ways the government may streamline and reduce burdens of capital markets regulation. Some ways the Treasury believes lawmakers can boost the capital markets include;
– State securities regulators update their regulations to exempt secondary trading of Tier 2 securities from Blue Sky rules or alternatively the SEC preempts state registration requirements for these transactions.
– Increase Tier 2 offering limit to $75 million.
– Allow single-purpose crowdfunding vehicles (SPVs) advised by a registered investment adviser, which may mitigate issuers’ concerns about vehicles having an unwieldy number of shareholders.
– Waive current limitations on investments in crowdfunding offerings for accredited investors as defined by Reg D. Reg CF may become more attractive if a company can more easily reach its funding goals.
– Amend crowdfunding rules to have non-accredited investment limits be based on the greater of annual income or net worth for the 5% and 10% tests, rather than the lesser.
– Increase the funding cap under Reg CF from the current $1.07 million to at least $5 million per year. This will allow companies to lower the offering costs per dollar raised while empowering a broader group of emerging companies to participate in this exemption.
– Raise the max revenue requirement from $25 million to $100 million for the conditional exemption from Section 12(g). This means Reg CF crowdfunded companies can stay private longer and should not be forced to register as public companies until reaching higher revenues.
– Update the definition of Accredited Investor to reflect the current rule that disenfranchises much of the country to the benefit of the very rich. Treasury says an amendments to the accredited investor definition should be undertaken to expand the eligible pool of sophisticated investors.
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