NSBA Files Amicus Brief on SEC Registrations Lawsuit

October 22, 2015

pic-money-budgetOn Oct. 14, 2015, NSBA submitted an amicus brief to the U.S. court of appeals for the District of Columbia circuit regarding a lawsuit disputing regulations from the Securities and Exchange Commission (SEC) to ease investment opportunities for small firms.

Specifically, the lawsuit, brought by state officials from Montana and Massachusetts, would prevent the SEC from implementing a portion of the NSBA-supported JOBS Act that would preempt state registration laws on sales of securities to qualified purchasers and create a central definition of “qualified purchaser.” The intent of this provision was to enable smaller firms to avoid costly state-by-state registrations and instead register just once through the SEC’s process.

In its brief, drafted by attorney Ford C. Ladd, NSBA argues against the states’ case by citing clear Congressional intent in the law to ease the burden on small firms seeking investment. The brief outlines: “The States’ position to constrain the Commission’s authority to define “qualified purchaser” is not only contrary to the express authority stated Section 401(b) of the JOBS Act and 15 U.S.C. 77r(b)(3), it would create an absurd result by limiting the capital formation Congress intended to create, while reducing investor protection by driving businesses to seek capital under Regulation D and other private offering exemptions that are less costly,2 and where there is greater opportunity for some issuers to defraud investors because there is typically no regulatory review of the offering before money is taken or where there are no or fewer required disclosure requirements or required audited financial statements.”

Please click here to view the full amicus brief.