The State of Massachusetts vs. Regulation A+ -- State Regulators Take the SEC to Court

 

As you undoubtedly have heard, or will hear, the Commonwealth of Massachusetts via William Galvin filed a lawsuit against the SEC on Friday to block the implementation of SEC Final Rules implementing Regulation A+.  

Though this was neither unforeseen nor unforeseeable, it strikes a major blow to the heart of small business capital formation.

The ensuing battle will be fought on many fronts – with much more powerful forces allied against small business than for.  Even in Congress the consumer’s consumer advocate, Senator Elizabeth Warren, reported to be the sub rosa ranking Democrat on the House Financial Services Committee, hails from the Great Commonwealth of Massachusetts.  So there will be no prisoners taken in this battle.

I say it is time to take the “ass”(es) out of Massachusetts - and take the fight to Washington, D.C.

It took Congress 16 years to pass legislation (NSMIA) to block a repeat of one of the more visible faux pas of Massachusetts' all knowing Chief Securities Administrator, barring ordinary retail investors from purchasing the stock of Apple Computer in its initial IPO in 1980 - deeming it too risky. Our small businesses and job creators can ill afford to wait any longer for the promises of the JOBS Act of 2012 to be realized, most notably Title III (crowdfunding) and Title IV (Regulation A+).

For more on this development, see my article today in CrowdfundInsider.

Peter M. Einstein

Founder/Executive Director, The Innovation Project @ AEGEA; Sr Advisor to Xeriant Aerospace & Goal Imagery Institute; Socially-Responsible Entrepreneur, Consultant & Investor

8y

Love the visual, Sam!

I have to agree with Jonathan Wilson. That is an incredibly tough case for the states. But we will obviously all watch closely.

The SEC on several occasions has pre-empted state securities regulations in favor of a uniform federal rule. Since the SEC was specifically empowered to revise Regulation A along the lines required by the JOBS Act, it is hard to see how the State of Massachusetts can have much hope for overturning the SEC's pre-emption rule.

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