During the ABA Business Law Section’s “Dialogue with the Director” last Friday, Corp Fin Director Jim Moloney mentioned that the Staff is “completely rethinking how registered offerings work.” Of course, Jim’s remarks were subject to the standard SEC speaker disclaimers, but they matched up pretty well with the speech I shared yesterday from SEC Chair Paul Atkins, where he said he’s instructed the Commission Staff to evaluate the ideas of:

– Adopting a regulatory IPO “on-ramp” that supplements the concept that Congress designed in the JOBS Act, and

– Providing nearly all public companies with an easier path to “shelf registration,” which allows them to access the public markets quickly and when market conditions are ideal.

Hat tip to Meredith for taking a deep dive into what this could look like – *could* being a key term since nothing has been proposed, let alone adopted. She found this 2015 interview with former SEC Commissioner Steven Wallman where he discusses the “company registration model” – and how the JOBS Act got us only part of the way to what could be a much simpler system. Here’s an excerpt:

On priorities, as an example, I thought it was very important to work on capital formation issues. And so I ended up chairing the Commission’s first ever Advisory Committee on Capital Formation. I’m proud and pleased that some of its core recommendations and much of the direction it suggested for evolution of the securities laws has been implemented since the last decade-and-a-half. Some of the recommendations, like full S-3 shelf registration for global issuers has developed over time to mimic what we had proposed in terms of a “company registration” concept.

The current law is still more complex and tortured in some respects than what’s needed if we simply implemented company registration, but in result it still arrives at almost the same place – just through a more maze-like process. We had proposed a concept of registering companies, not securities, — a Copernican shift from the current model — that would eliminate some of the transaction-based complexity of the current structure and make it much more streamlined and simplified. But the current
law, within at least an order of magnitude, has directionally moved to the same place we had suggested.

Some of the regulations that have now been implemented as part of the JOBS Act were among other concepts that we had reviewed and promoted. So I feel quite proud about all that, that we’ve moved in the direction that that the Advisory Committee suggested, albeit under different names, with other kinds of nomenclature and semantics, and over a timeframe that is overly long compared to what could have been done had we just moved forward in a timely manner then. But sometimes big ideas and novel approaches take time to acclimate and actually move through the process, especially when you have
regulatory systems that almost by definition are primarily backwards looking and influenced heavily by incumbents as the ones with a current stake in the process. It takes a bold staff and thoughtful regulatory body leadership to be what some would — perhaps even attempting to be disparaging in these circumstances — call “adventurous.” But I have always thought the Commission up to it.

In the interview, Steven also discusses his efforts to modernize SEC rules to reflect new technologies – proving that the more things change, the more they stay the same! Check out these resources for more about the ideas that were floated on the company registration model back around “the turn of the century” (i.e., the late 90s and early 2000s):

– Private placement exemptions in a company registration model

– Letter from the Committee on Securities Regulation of The Association of the Bar of the City of New York in response to the SEC’s Release Nos. 33-7606A and 34-40632A, dated November 13, 1998, which requested comments on proposed rules for the registration of securities offerings under the Securities Act of 1933 and related provisions of the Securities Exchange Act of 1934.

– Liz Dunshee