Opinions and Optimism on Length of Title III Delay
For the past six months or so, the SEC has been dropping hints about Title III and Title IV being enacted “sometime this year” or “hopefully by the end of 2014.” When it is July, mid-summer, and you hear things like “sometime this year” you think nothing of it. There is so much time between summer and New Years that the possibility of it not happening is ridiculous. Then again, when it comes to the SEC and Title III and Title IV, timeframes are not held to everyday standards. They are already over 700 days late enacting Title III and Title IV, so what are their predictions or forecasts truly worth?
A recent Entrepreneur article discussing the SEC delay notes the Title III Equity Crowdfunding rules and Title IV Regulation A+ rules from the JOBS Act are set to be finalized in October 2015. The article then goes on to add that the rules will require 60 days to be published in the federal register and become law. October + 60 days = the following year, and in this case, 2016. So as we sit here in December 2014 with the lingering but fading hopes of Title III and Title IV being enacted soon, we now have documentation saying it won’t happen until 2016. Twenty sixteen. We had to spell it out because having spent all of 2014 waiting, even thinking about 2016 is preposterous.
The author of the article, Crowdfunding Attorney and JOBS Act Expert Kendall Almerico, also points out that the majority of industry experts expected Title III and Title IV to be enacted by late 2014. SEC Chair Mary Jo White fueled this fire when she addressed the SEC Investor Advisory Committee in October. White stated in her opening remarks that the agency would “be pushing forward in the near term” on “finalizing our remaining JOBS Act mandates.” Almerico playfully expressed that “apparently, ‘near term’ means ‘next year’ to the SEC.”
Experienced transactional attorney and crowdfunding and JOBS Act expert Anthony Zeoli expressed his displeasure in a recent CrowdFundBeat article on the SEC delay. In the article, Zeoli shares information and his opinion:
“On Friday, December 5th, the S.E.C. published its agenda with respect to upcoming rulemaking and all I can say (at least publicly) is BAH HUMBUG! According to this agenda, the S.E.C. has set October of 2015 as the target date for the implementation of final rules for (among others):
RIN: 3235-AL37 – Adopting final rules regarding the offer and sale of securities through Title III crowdfunding;
RIN: 3235-AL39 – Adopting final rules regarding the offer and sale of securities through Title IV (Regulation A+); and
RIN: 3235-AL46 – Certain amendments to Regulation D, Form D and Rule 156 under the Securities Act.
If these new target dates are true (even in part), I am certain that many people will be significantly disappointed this holiday season.”
Indeed, Mr. Zeoli, there is no doubt many people will be significantly disappointed this holiday season. The entire industry has been waiting for this gift all year. We’ve been on our best behavior and done everything we could to prove we deserve it. Waiting all year in anticipation, only to come up empty-handed, will only turn anticipation into frustration. But is there still hope for early next year? 10/00/15 isn’t exactly a real date to count down to, so what does it really mean?
To clarify what this date actually stands for we chose to cite another crowdfunding expert, Sara Hanks. As the co-founder and CEO of CrowdCheck, an attorney with over 30 years of experience in the corporate and securities field and serving on the SEC Advisory Committee on Small and Emerging Companies, Hanks offers an educated and experienced opinion on the matter. She was notably stirred up by the SEC’s release of the target date for the implementation of the final rulings and shared her discontentment in a skillfully crafted blog on SeedInvest. Her intimate knowledge of SEC proceedings allows her to enlighten the rest of us on what this fictional target date represents and where it came from:
“At the other end of the speculation spectrum we have some statements about the SEC delaying the rulemakings until October of 2015. This is based on the twice-yearly publication of the agency’s “Regulatory Flexibility Agenda.” All government agencies making rules have to give notice to the American people of the rules they are working on, and when they expect next steps to be taken. But these dates are not binding and are never precise. The SEC’s list of pending rules, which reflects the state of affairs on October 10, 2014, gives the date “10/00/15” as the date for final action on the crowdfunding rules, and in fact for nearly all the rules the SEC is working on. Why is this? Because when asked for a final date for rulemaking, staffers aren’t in a position to make any predictions and so the default date that gets entered is the end of the fiscal year.”
Ahhh, don’t you feel better after reading that? Like a refreshing sip of a holiday beverage. It makes sense that the staffers would just choose a date to choose a date, because judging by the history of Title III and Title IV, due dates aren’t much of a priority. According to Hanks, the SEC is forced to give the American people a date. Is it really a surprise to anyone they would choose the end of fiscal year?
I hope you all feel a little better about the whole 10/00/2015 story now, and if you don’t, here’s a little extra something to sweeten the ending. In Anthony Zeoli’s article he mentions that the SEC Commissioners recently scheduled a closed door meeting for Thursday, December 11th. Zeoli said that he and his industry expert friends had deliberated on this being the meeting to finalize Title III and Title IV, but no information has been shared. The December 5th release of the October 2015 finalization target dates may have dampened their spirits a little, but there is still hope.
And when it comes to Title III and Title IV, hope is all we’ve had for 700+ days, so hold on tight.
Thank you again for reading and please leave your comments and questions below!