The Exempt Offering Framework: Review of the Concept Release (Part One of Two)

Exceptions to a rule can sometimes become so extensive that they overpower the rule itself, as some could argue is the case with the rules regarding the registration of securities. Although the Securities Act of 1933 requires that every offer and sale of securities be registered with the SEC absent an exemption, reliance on numerous exemptions created over the years has become so common that, according to SEC estimates, new capital raised in 2018 through exempt offerings was more than double that raised through registered offerings. Further, the exempt offering framework has evolved into a complex patchwork that can be difficult for would-be participants to navigate. As a result, the SEC recently published its Concept Release on Harmonization of Securities Offering Exemptions (Concept Release) seeking public comment – due September 24, 2019 – on ways “to simplify, harmonize, and improve” the rules for exempt offerings. This two‑part series examines the exempt offerings framework and the Concept Release’s questions about that framework. This article summarizes the elements of the Concept Release of particular interest to private fund managers. The second article will discuss the key takeaways from the Concept Release for private fund managers. For analysis of other SEC initiatives, see “Key Takeaways for Private Fund Managers From SEC’s Latest Reg Flex Agenda” (Aug. 15, 2019).

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