Securities and Exchange Commission Chairman Mary Jo White said today that investor protection concerns were paramount when it lifted a ban on advertising for private securities offerings earlier this month.
Ms. White tried to reassure the agency's Investor Advisory Committee that its recommendations for investor safeguards were reflected in the additional package of proposed rules that SEC released this month when it adopted the advertising rule.
The proposals include requiring issuers of unregistered securities to file a Form D notice 15 days before they start advertising and to disclose additional information about the offering and its investors.
At a July 10 meeting, the SEC adopted the advertising rule and a related rule banning convicts from pedaling private securities. It voted 3-2 to propose the investor protections, which are now open to public comment.
“You can see that consideration [of the IAC's guidance] in all three of those rule makings,” Ms. White told the committee. “Your recommendations were in my brief case every day and every night so that they would be near at hand as we worked through these rule makings.”
Last fall, the IAC made several recommendations about adding investor protections to the then-pending final advertising rule. The 21-member group, established by the Dodd-Frank financial reform law, is designed to represent the perspective of retail investors.
Barbara Roper, a committee member, was not satisfied with Ms. White's argument that the advertising rule and the investor protection proposal should be viewed as a package.
“Bifurcating the process significantly decreases the likelihood that investor protections ultimately will be adopted,” said Ms. Roper, director of investor protection at the Consumer Federation of America.
Ms. Roper also didn't accept Ms. White's explanation that the SEC had to act quickly on the advertising rule to implement legislation — the Jumpstart Our Business Startups Act — approved overwhelmingly by Congress more than a year ago. The measure eased securities registration for small firms so that they could raise capital more easily.
“I don't think that it's adequate to say that the press of a statutory-mandated deadline is adequate to justify treating the investor protection aspects of this rule as a secondary concern,” Ms. Roper said.
Still, Ms. White asserted that defending investors is a priority.
“I don't at any time intend or expect to treat investor protection as secondary to anything,” Ms. White said.
Another member of the Investor Advisory Committee praised the SEC for incorporating its work in the private-placement advertising regulation.
“I was thrilled with how much attention was paid to the committee's recommendation in the final rule making,” said Darcy Bradbury, managing director and director of external affairs at D.E. Shaw & Co. LP.