The following post comes to us from Robert Thompson and Donald Langevoort, Professor of Business Law and Professor of Law, respectively, at the Georgetown University Law Center.
In our article, Redrawing the Public-Private Boundaries in Entrepreneurial Capital Raising, we examine what the JOBS Act (enacted earlier this year) tells us about the division between the public and private spheres in securities regulation. On its face the JOBS Act broadly expands the private realm as defined by our national securities laws. It provides two new exemptions from registration (crowdfunding and Regulation A+) and will broadly expand the reach of the most-used existing exemption from registration by removing the ban on general solicitation from exempt offerings made pursuant to Rule 506, provided they are made only to accredited investor. Yet legislative reform has done little to shore up the shaky foundation of existing theory that guides how we have thought about dividing public from private obligations in this area of the law. For the Securities Act of 1933 Act, the part of securities regulation that regulates the capital-raising, the changes spotlight a lingering identity crisis: Given the ever-expanding presence of Securities Exchange Act of 1934 Act regulation over the last half-century (e.g. integrated disclosure, shelf registration), is there any place left for the additional regulation traditionally provided by the ’33 Act?