Comments on the SEC’s Proposed Rule Amendments to Facilitate Intrastate and Regional Securities Offerings


The Milken Institute Center for Financial Markets (CFM) provided written comments to the U.S. Securities and Exchange Commission (SEC) on proposed changes to Rule 147, which provides a safe harbor to companies seeking to issue securities in an intrastate transaction that is exempt under Section 3(a)(11) of the Securities Act of 1933 (the “1933 Act”), as well as proposed changes to Rule 504 of Regulation D and inquiries about the continued viability of Rule 505 under Regulation D.

In its January 11, 2016 letter, CFM made a series of recommendations to the SEC.

Among them include:

  • Keep Rule 147 as a safe harbor to Section 3(a)(11) of the 1933 Act, while creating a parallel and substantially similar new exemption for companies that do not qualify for the 3(a)(11) exemption but are effectively engaged in an intrastate offering.
  • Avoid imposing substantive requirements on Rule 147 offerings at the federal level, allowing the States to innovate and create laws that meet their needs.
  • Remove the confusing “80 percent tests” currently found in Rule 147 in favor of a more flexible and meaningful standard.
  • Index the investment limits for offerings under Rule 504 for inflation.
  • Exempt securities sold under Rule 147 and 504 from the requirements of Section 12(g) of the Securities Exchange Act of 1934.
  • The Commission should not repeal or amend Rule 504(b)(1)(iii).
  • The Commission should investigate whether changing Rule 505 to provide an exempt, simple debt-only offering is feasible and could be beneficial for smaller issuers.

Download the letter for details.

Updated/Published January 11, 2016