SEC Report Shows Growth in Reg D Private Placements

June 5, 2012

According to a February 2012 Securities and Exchange (SEC) study, Regulation D private placements are a larger source of capital than public debt or public equity offerings. The report found that, in 2010 and the first quarter of 2011, Regulation D offerings surpassed public debt offerings and eclipsed public equity offerings as the dominant offering method in terms of aggregate amount of capital raised in the U.S.

According to the report:

  • At least $905 billion was raised through Regulation D in 2010;
  • The amount of capital raised through Regulation D offerings may be considerably larger than what is disclosed on Form D because there is no closing filing requirement;
  • The median Regulation D offering is modest in size: approximately $1 million; and
  • There have been a large number of smaller offerings: 37,000 unique offerings in 2009, 2010 and the first quarter of 2011 combined.

To read the full report, click here.

The JOBS Act, enacted April 5, 2012, will make Regulation D even more attractive since businesses will soon be able to engage in general solicitation and general advertising seeking accredited investors for Regulation D offerings.  In addition, the Regulation A small offerings threshold has been increased to $50 million.  In 2013, the new crowdfunding exemption will come into force.  Finally, the filing burden on new small and medium-sized public companies has been reduced.

For information on the SEC Advisory Committee on Small and Emerging Companies, click here. On June 8, the Advisory Committee will meet to consider SEC regulations implementing the JOBS Act.

For panelist materials presented at the November 2011 SEC Government-Business Forum on Small Business Capital Formation, click here.

For its recently released report, click here.