House Bill Would Constrict “Private” Financing MarketBy
The Private Securities Transparency and Reform Act, a draft bill aired in the House Committee on Financial Services in September 2019, would impose additional requirements on private financing offerings in an effort to make them less attractive and to encourage more companies to pursue financing through the public market, such as an initial public offering (IPO).
According to the U.S. Securities & Exchange Commission (SEC), in 2018, public offerings accounted for $1.4 trillion of new capital compared to approximately $2.9 trillion that the SEC has estimated was raised through exempt offering channels. The private market consists of “accredited investors” having in excess of $1 million of assets or an annual income of more than $200,000. The availability of financing in the private market allows companies seeking that financing to avoid issuing audited financial reports to the SEC which would be required with financing from the public market.
Michael S. Pieciak, past president of the North American Securities Administrators Association (NASAA), says, “NASAA strongly supports the Private Securities Transparency and Reform Act and looks forward to working with the Subcommittee and the Congress to secure its passage.”