Regulation Crowdfunding and Regulation A Relief and Assistance for Victims of Hurricane Florence, 47834-47836 [2018-20740]
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Federal Register / Vol. 83, No. 184 / Friday, September 21, 2018 / Rules and Regulations
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§ 679.45(e)(1)(i) and (ii) ......................................
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the IFQ permit holder’s estimated fee liability
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§ 679.45(e)(2), (f)(1)(i) and (ii), and (f)(5) ...........
§ 679.45(f)(1) introductory text ...........................
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the IFQ permit holder .......................................
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IFQ permit holder’s ..........................................
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IFQ permit holder or RQE.
the estimated fee liability.
IFQ fishing permit or RFQ permit account
held.
IFQ permit holder or RQE.
IFQ permit holder or RQE has.
by the IFQ permit holder or RQE.
15 CFR part 906.
the IFQ permit holder or RQE.
IFQ permit holder or RQE unless the IFQ permit holder or RQE requests.
IFQ permit holder’s or RQE’s.
15 CFR part 906.
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[FR Doc. 2018–20410 Filed 9–20–18; 8:45 am]
BILLING CODE 3510–22–P
SECURITIES AND EXCHANGE
COMMISSION
17 CFR Parts 227 and 230
[Release No. 33–10556]
Regulation Crowdfunding and
Regulation A Relief and Assistance for
Victims of Hurricane Florence
Securities and Exchange
Commission.
ACTION: Interim final temporary rule.
AGENCY:
We are adopting interim final
temporary rules for issuers subject to
reporting obligations pursuant to
Regulation Crowdfunding and
Regulation A in order to address the
needs of companies directly or
indirectly affected by Hurricane
Florence. The temporary rules extend
the filing deadlines for specified reports
and forms due pursuant to Regulation
Crowdfunding and Regulation A for
certain issuers.
DATES: These rules are effective from
September 21, 2018, through October
29, 2018.
FOR FURTHER INFORMATION CONTACT:
Jennifer Zepralka, Office Chief, or Amy
Reischauer, Special Counsel, Office of
Small Business Policy, Division of
Corporation Finance, at (202) 551–3460,
U.S. Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–3628.
SUPPLEMENTARY INFORMATION: We are
adopting amendments to 17 CFR
227.202 (‘‘Rule 202’’) of Regulation
Crowdfunding 1 under the Securities
Act of 1933 (the ‘‘Securities Act’’) 2 and
17 CFR 230.257 (‘‘Rule 257’’) of
Regulation A 3 under the Securities Act
as interim final temporary rules.
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SUMMARY:
1 17
CFR 227 et seq.
U.S.C. 77a et seq.
3 17 CFR 230.251 through 230.263.
17:31 Sep 20, 2018
II. Temporary Relief From Filing
Requirements for Issuers Subject to the
Reporting Obligations of Regulation
Crowdfunding or Regulation A
The lack of communications,
transportation, electricity, facilities, and
available staff and professional advisors
as a result of Hurricane Florence could
hamper the efforts of companies with
reporting obligations to meet their filing
deadlines pursuant to Regulation
Crowdfunding or Regulation A. At the
same time, investors have an interest in
the timely availability of required
information about these companies.
While the Commission believes that the
temporary relief from filing
requirements provided by the
amendments to Rule 202 of Regulation
Crowdfunding 5 and Rule 257 of
U.S.C. 77z–3.
Rule 202(c) of Regulation Crowdfunding. 17
CFR 227.202(c).
Regulation A 6 is both necessary in the
public interest and consistent with the
protection of investors, we remind
companies that are the subject of the
relief provided in these interim final
temporary rules to continue to evaluate
their obligations to make materially
accurate and complete disclosures in
accordance with the anti-fraud
provisions of the federal securities laws.
Accordingly, pursuant to Section 28
of the Securities Act, we are adopting
interim final temporary rules providing
that an issuer subject to the reporting
requirements of either Regulation
Crowdfunding or Regulation A is
exempt from any requirement to file
specified reports or forms with the
Commission where the conditions
below are satisfied:
(a) The issuer is not able to meet a
filing deadline due to Hurricane
Florence or its aftermath;
(b) The issuer files with the
Commission, on or before October 29,
2018, the report or form required to be
filed pursuant to either Regulation
Crowdfunding or Regulation A during
the period from and including
September 14, 2018 to and including
October 26, 2018; and
(c) In any such report or form, the
issuer discloses that it is relying on the
interim final temporary rules and states
the reasons why, in good faith, it could
not file such report or form on a timely
basis.
For Regulation Crowdfunding, the
relief includes annual reports on Form
C–AR, progress updates on Form C–U,
and termination of reporting on Form
C–TR. For Regulation A, the relief
includes post-qualification amendments
required at least every 12 months after
the qualification date to include
updated financial statements, annual
reports on Form 1–K, semi-annual
reports on Form 1–SA, special financial
reports on Forms 1–K or 1–SA, current
4 15
2 15
VerDate Sep<11>2014
I. Introduction
On September 14, 2018, Hurricane
Florence made landfall near the North
Carolina and South Carolina border. The
storm and subsequent flooding have
displaced individuals and businesses
and disrupted communications and
transportation across the affected region.
We are adopting these interim final
temporary rules to address the needs of
companies directly or indirectly affected
by Hurricane Florence or its aftermath
that are subject to reporting obligations
pursuant to Regulation Crowdfunding or
Regulation A.
Section 28 of the Securities Act
provides that the Commission may, by
rule or regulation, ‘‘conditionally or
unconditionally exempt any person,
security, or transaction, or any class or
classes of persons, securities, or
transactions, from any provision or
provisions of this title or of any rule or
regulation issued under this title, to the
extent that such exemption is necessary
or appropriate in the public interest,
and is consistent with the protection of
investors.’’ 4
5 See
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6 See Rule 257(f) of Regulation A. 17 CFR
230.257(f).
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Federal Register / Vol. 83, No. 184 / Friday, September 21, 2018 / Rules and Regulations
reports on Form 1–U, and exit reports
on Form 1–Z.
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III. Economic Analysis
Regulation Crowdfunding and
Regulation A permit offers and sales of
securities without registration under the
Securities Act, subject to certain
limitations and conditions, including
compliance with ongoing reporting
requirements. Based on staff analysis,
between June 19, 2015 (the effective
date of the most recent Regulation A
amendments 7) and September 15, 2018,
approximately 241 filers had Regulation
A offering statements qualified by the
Commission, excluding withdrawn
offerings. Approximately 1,010 issuers
initiated Regulation Crowdfunding
offerings with Form C filings between
May 16, 2016 and August 31, 2018,
excluding issuers that have withdrawn
offerings.8 Approximately 40 registered
intermediaries, including 31 registered
funding portals and 9 registered brokerdealers, have participated in Regulation
Crowdfunding offerings with Form C
filings between May 16, 2016 and
August 31, 2018, excluding withdrawn
offerings.
We lack the data to estimate the
number of investors in Regulation A or
Regulation Crowdfunding offerings that
could be affected if issuers rely on the
relief provided by the interim final
temporary rules, because information on
the number of investors is generally not
required to be disclosed in periodic or
current reports required under
Regulation A or in periodic reports or
progress updates required under
Regulation Crowdfunding.9
We are mindful of the costs and
benefits of the interim final temporary
rules.10 We believe the interim final
temporary rules will benefit issuers that
have an obligation to file specified
reports with the Commission pursuant
to either Regulation Crowdfunding or
Regulation A and have been adversely
affected by Hurricane Florence or its
aftermath by permitting them to take
additional time to meet their reporting
7 SEC Rel. No. 33–9741 (Mar. 25, 2015) [80 FR
21806 (Apr. 20, 2015)].
8 These figures overstate the number of issuers
with obligations to file annual reports under
Regulation Crowdfunding, because they do not
exclude issuers that have failed to raise the target
amount or have exited the reporting regime.
9 Regulation A issuers that file Form 1–Z to
suspend reporting are required to disclose the
number of shareholders of record.
10 Section 2(b) of the Securities Act [15 U.S.C.
77b(b)] requires the Commission, when engaging in
rulemaking where it is required to consider or
determine whether an action is necessary or
appropriate in the public interest, to consider, in
addition to the protection of investors, whether the
action will promote efficiency, competition, and
capital formation.
VerDate Sep<11>2014
16:15 Sep 20, 2018
Jkt 244001
obligations. We expect the relief
provided by the interim final temporary
rules will benefit issuers that, absent the
relief, would not be able to avail
themselves of the exemption from
registration under Regulation
Crowdfunding or Regulation A because
the timely filing of required reports is a
condition to the exemptions. In the
absence of this relief, issuers could
incur prohibitively high costs in an
attempt to meet filing deadlines given
the lack of communications,
transportation, electricity, facilities, and
available staff and professional advisors.
The requirement for an issuer to
disclose that it is relying on Rule 202(c)
of Regulation Crowdfunding or Rule
257(f) of Regulation A and to state the
reasons why, in good faith, it could not
file a report or form on a timely basis
may impose minimal additional costs
on issuers availing themselves of this
relief. However, we believe that these
minimal costs are justified in light of the
significant negative implications of not
being able to rely on the exemption and
the prohibitively high costs an issuer
may incur in attempting to file in a
timely manner.
We also acknowledge that there may
be costs imposed on investors,
intermediaries, and other market
participants due to delayed access to
information about offerings conducted
in reliance on Regulation A and
Regulation Crowdfunding. Generally,
reporting requirements strengthen
investor protection and decrease the
extent of information asymmetries
between issuers and investors. Ongoing
reporting provides investors with
periodically updated information,
allowing them to assess investment
opportunities based on the information
provided and their level of risk
tolerance, resulting in better informed
investment decisions and improved
allocative efficiency. Given that the
interim final temporary rules allow for
delayed reporting for a limited time
period and only under specified
conditions, we do not believe such costs
will be significant.
The interim final temporary rules will
not substantially affect competition or
capital formation. We acknowledge the
possibility that the interim final
temporary rules may have a minor
impact on efficiency. On the one hand,
as noted above, the delay in reporting
could marginally affect allocative
efficiency to the extent that it allows
information asymmetries between
investors and issuers to persist for the
length of time of the delay. On the other
hand, we expect efficiency gains to the
extent that the interim final temporary
rules allow issuers to continue to rely
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47835
on either of the exemptions from
registration that would not be available
if one of the required reports that is a
condition to the exemptions was not
filed in a timely manner, or to the extent
the issuers are able to avoid paying a
premium to service providers in an
attempt to file in a timely manner by
delaying reporting during the specified
relief period.
As an alternative to the relief
specified in the interim final temporary
rules, we could have considered a
longer or shorter relief period. While a
shorter period would have reduced the
costs to investors of asymmetric
information, it would also reduce the
benefits of the interim final temporary
rules to issuers. Similarly, a longer
period would increase the costs to
investors. We believe that the
approximately nine-week delay in the
interim final temporary rules is
appropriate given the potential impact
Hurricane Florence or its aftermath
could have on the efforts of companies
to meet filing deadlines pursuant to
Regulation Crowdfunding and
Regulation A.
IV. Procedural and Other Matters
The Administrative Procedure Act
(‘‘APA’’) generally requires an agency to
publish notice of a rulemaking in the
Federal Register and provide an
opportunity for public comment. This
requirement does not apply, however, if
the agency ‘‘for good cause finds . . .
that notice and public procedure are
impracticable, unnecessary, or contrary
to the public interest.’’ 11 The APA also
generally requires that an agency
publish an adopted rule in the Federal
Register at least 30 days before it
becomes effective. This requirement
does not apply, however, if the agency
finds good cause for making the rule
effective sooner.12
Given the temporary nature of the
relief contemplated by the interim final
temporary rules and the significant and
immediate impact of Hurricane Florence
and its aftermath on issuers in affected
areas, as discussed above, the
Commission finds that good cause exists
to dispense with notice and comment as
impracticable and unnecessary, and to
act immediately to amend Rule 202 of
Regulation Crowdfunding and Rule 257
of Regulation A.13 Further, the interim
11 5
U.S.C. 553(b)(3)(B).
U.S.C. 553(d)(3).
13 This finding also satisfies the requirements of
5 U.S.C. 808(2), allowing the interim final
temporary rules to become effective
notwithstanding the requirement of 5 U.S.C. 801 (if
a federal agency finds that notice and public
comment are impractical, unnecessary or contrary
12 5
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21SER1
47836
Federal Register / Vol. 83, No. 184 / Friday, September 21, 2018 / Rules and Regulations
final temporary rules will not affect the
burden or cost estimates associated with
existing collections of information
under Regulation Crowdfunding and
Regulation A for purposes of the
Paperwork Reduction Act of 1995.14
V. Statutory Basis and Text of
Amendments
We are adopting amendments to Rule
202 of Regulation Crowdfunding and
Rule 257 of Regulation A under the
authority set forth in the Securities Act
(15 U.S.C. 77a et seq.), particularly,
Section 28 thereof.
List of Subjects
17 CFR Part 227
Crowdfunding, Funding portals,
Intermediaries, Reporting and
recordkeeping requirements, Securities.
17 CFR Part 230
Reporting and recordkeeping
requirements, Securities.
In accordance with the foregoing, title
17, chapter II of the Code of Federal
Regulations is amended as follows:
PART 227—REGULATION
CROWDFUNDING, GENERAL RULES
AND REGULATIONS
1. The authority citation for part 227
is revised to read as follows:
■
Authority: 15 U.S.C. 77d, 77d–1, 77s, 77z–
3, 78c, 78o, 78q, 78w, 78mm, and Pub. L.
112–106, secs. 301–305, 126 Stat. 306 (2012).
2. Amend § 227.202 by adding
paragraph (c) to read as follows:
■
§ 227.202
Ongoing reporting requirements.
*
*
*
*
*
(c) Temporary relief from certain
reporting requirements. (1) An issuer
that is not able to meet a filing deadline
for any report or form required to be
filed by this section, 17 CFR
227.203(a)(3)), or 17 CFR 227.203(b)
during the period from and including
September 14, 2018 to and including
October 26, 2018 due to Hurricane
Florence and its aftermath shall be
deemed to have satisfied the filing
deadline for such report or form if the
issuer files such report or form with the
Commission on or before October 29,
2018.
(2) In any report or form filed
pursuant to paragraph (c)(1) of this
section, the issuer must disclose that it
is relying on this paragraph (c) and state
the reasons why, in good faith, it could
not file such report or form on a timely
basis.
PART 230—GENERAL RULES AND
REGULATIONS, SECURITIES ACT OF
1933
3. The authority citation for part 230
continues to read in part as follows:
■
Authority: 15 U.S.C. 77b, 77b note, 77c,
77d, 77f, 77g, 77h, 77j, 77r, 77s, 77z–3, 77sss,
78c, 78d, 78j, 78l, 78m, 78n, 78o, 78o-7 note,
78t, 78w, 78ll(d), 78mm, 80a–8, 80a–24, 80a–
28, 80a–29, 80a–30, and 80a–37, and Pub. L.
112–106, sec. 201(a), sec. 401, 126 Stat. 313
(2012), unless otherwise noted.
4. Amend § 230.257 by adding
paragraph (f) to read as follows:
■
§ 230.257 Periodic and current reporting;
exit report.
*
*
*
*
*
(f) Temporary relief from ongoing
reporting requirements. (1) An issuer
that is not able to meet a filing deadline
for any report or form required to be
filed by 17 CFR 230.252(f)(2)(i)) or this
section during the period from and
including September 14, 2018 to and
including October 26, 2018 due to
Hurricane Florence and its aftermath
shall be deemed to have satisfied the
filing deadline for such report or form
if the issuer files such report or form
with the Commission on or before
October 29, 2018.
(2) In any report or form filed
pursuant to paragraph (f)(1) of this
section, the issuer must disclose that it
is relying on this paragraph (f) and state
the reasons why, in good faith, it could
not file such report or form on a timely
basis.
By the Commission.
Dated: September 19, 2018.
Brent J. Fields,
Secretary.
[FR Doc. 2018–20740 Filed 9–19–18; 4:15 pm]
BILLING CODE 8011–01–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
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16:15 Sep 20, 2018
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[Docket No. USCG–2018–0752]
Special Local Regulation; Marine
Events Within the Fifth Coast Guard
District
AGENCY:
PO 00000
The Coast Guard will enforce
the special local regulation on the
waters of the New Jersey Intracoastal
Waterway (ICW), near Atlantic City,
New Jersey, from 6 a.m. to 9 a.m. on
September 23, 2018. This action is
necessary to ensure safety of life on the
navigable waters of the United States
during a triathlon event. The purpose of
this notice of enforcement is to
announce a change in the date in which
the event is being held.
SUMMARY:
The regulations in 33 CFR
100.501 will be enforced from 6 a.m. to
9 a.m. on September 23, 2018, for the
special local regulation listed as (a)12 in
the table to § 100.501.
DATES:
If
you have questions about this notice of
enforcement, you may call or email
Petty Officer Thomas J. Welker,
Waterways Management Branch, U.S.
Coast Guard Sector Delaware Bay;
telephone (215) 271–4814, email
Thomas.j.welker@uscg.mil.
FOR FURTHER INFORMATION CONTACT:
From 6
a.m. to 9 a.m. on September 23, 2018,
the Coast Guard will enforce the special
local regulation at 33 CFR 100.501, table
to § 100.501, (a)12 for the regulated area
located in the New Jersey ICW in
Atlantic City, NJ. The published
enforcement periods for this event
include the second or third Saturday
and Sunday in September. We are
announcing a change of enforcement
date for this year’s event with this
notice of enforcement because the event
will take place on the fourth Sunday in
September.
The Captain of the Port, Delaware Bay
will be enforcing the Special Local
Regulation as specified in § 100.501(c).
In addition to this notice of
enforcement in the Federal Register, the
Coast Guard plans to provide the
maritime community with advanced
notice of enforcement of regulation by
Broadcast Notice to Mariners (BNM),
Local Notice to Mariners and on-scene
notice by designated representative.
SUPPLEMENTARY INFORMATION:
Dated: September 18, 2018.
Scott E. Anderson,
Captain, U.S. Coast Guard, Captain of the
Port Delaware Bay.
33 CFR Part 100
to the public interest, a rule shall take effect at such
time as the federal agency promulgating the rule
determines). The interim final temporary rules also
do not require analysis under the Regulatory
Flexibility Act. See 5 U.S.C. 604(a) (requiring a final
regulatory flexibility analysis only for rules
required by the APA or other law to undergo notice
and comment).
14 44 U.S.C. 3501 et seq.
Notice of enforcement of
regulation; change of enforcement date.
ACTION:
[FR Doc. 2018–20613 Filed 9–20–18; 8:45 am]
BILLING CODE 9110–04–P
Coast Guard, DHS.
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]]>Agencies
[Federal Register Volume 83, Number 184 (Friday, September 21, 2018)]
[Rules and Regulations]
[Pages 47834-47836]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-20740]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 227 and 230
[Release No. 33-10556]
Regulation Crowdfunding and Regulation A Relief and Assistance
for Victims of Hurricane Florence
AGENCY: Securities and Exchange Commission.
ACTION: Interim final temporary rule.
-----------------------------------------------------------------------
SUMMARY: We are adopting interim final temporary rules for issuers
subject to reporting obligations pursuant to Regulation Crowdfunding
and Regulation A in order to address the needs of companies directly or
indirectly affected by Hurricane Florence. The temporary rules extend
the filing deadlines for specified reports and forms due pursuant to
Regulation Crowdfunding and Regulation A for certain issuers.
DATES: These rules are effective from September 21, 2018, through
October 29, 2018.
FOR FURTHER INFORMATION CONTACT: Jennifer Zepralka, Office Chief, or
Amy Reischauer, Special Counsel, Office of Small Business Policy,
Division of Corporation Finance, at (202) 551-3460, U.S. Securities and
Exchange Commission, 100 F Street NE, Washington, DC 20549-3628.
SUPPLEMENTARY INFORMATION: We are adopting amendments to 17 CFR 227.202
(``Rule 202'') of Regulation Crowdfunding \1\ under the Securities Act
of 1933 (the ``Securities Act'') \2\ and 17 CFR 230.257 (``Rule 257'')
of Regulation A \3\ under the Securities Act as interim final temporary
rules.
---------------------------------------------------------------------------
\1\ 17 CFR 227 et seq.
\2\ 15 U.S.C. 77a et seq.
\3\ 17 CFR 230.251 through 230.263.
---------------------------------------------------------------------------
I. Introduction
On September 14, 2018, Hurricane Florence made landfall near the
North Carolina and South Carolina border. The storm and subsequent
flooding have displaced individuals and businesses and disrupted
communications and transportation across the affected region. We are
adopting these interim final temporary rules to address the needs of
companies directly or indirectly affected by Hurricane Florence or its
aftermath that are subject to reporting obligations pursuant to
Regulation Crowdfunding or Regulation A.
Section 28 of the Securities Act provides that the Commission may,
by rule or regulation, ``conditionally or unconditionally exempt any
person, security, or transaction, or any class or classes of persons,
securities, or transactions, from any provision or provisions of this
title or of any rule or regulation issued under this title, to the
extent that such exemption is necessary or appropriate in the public
interest, and is consistent with the protection of investors.'' \4\
---------------------------------------------------------------------------
\4\ 15 U.S.C. 77z-3.
---------------------------------------------------------------------------
II. Temporary Relief From Filing Requirements for Issuers Subject to
the Reporting Obligations of Regulation Crowdfunding or Regulation A
The lack of communications, transportation, electricity,
facilities, and available staff and professional advisors as a result
of Hurricane Florence could hamper the efforts of companies with
reporting obligations to meet their filing deadlines pursuant to
Regulation Crowdfunding or Regulation A. At the same time, investors
have an interest in the timely availability of required information
about these companies. While the Commission believes that the temporary
relief from filing requirements provided by the amendments to Rule 202
of Regulation Crowdfunding \5\ and Rule 257 of Regulation A \6\ is both
necessary in the public interest and consistent with the protection of
investors, we remind companies that are the subject of the relief
provided in these interim final temporary rules to continue to evaluate
their obligations to make materially accurate and complete disclosures
in accordance with the anti-fraud provisions of the federal securities
laws.
---------------------------------------------------------------------------
\5\ See Rule 202(c) of Regulation Crowdfunding. 17 CFR
227.202(c).
\6\ See Rule 257(f) of Regulation A. 17 CFR 230.257(f).
---------------------------------------------------------------------------
Accordingly, pursuant to Section 28 of the Securities Act, we are
adopting interim final temporary rules providing that an issuer subject
to the reporting requirements of either Regulation Crowdfunding or
Regulation A is exempt from any requirement to file specified reports
or forms with the Commission where the conditions below are satisfied:
(a) The issuer is not able to meet a filing deadline due to
Hurricane Florence or its aftermath;
(b) The issuer files with the Commission, on or before October 29,
2018, the report or form required to be filed pursuant to either
Regulation Crowdfunding or Regulation A during the period from and
including September 14, 2018 to and including October 26, 2018; and
(c) In any such report or form, the issuer discloses that it is
relying on the interim final temporary rules and states the reasons
why, in good faith, it could not file such report or form on a timely
basis.
For Regulation Crowdfunding, the relief includes annual reports on
Form C-AR, progress updates on Form C-U, and termination of reporting
on Form C-TR. For Regulation A, the relief includes post-qualification
amendments required at least every 12 months after the qualification
date to include updated financial statements, annual reports on Form 1-
K, semi-annual reports on Form 1-SA, special financial reports on Forms
1-K or 1-SA, current
[[Page 47835]]
reports on Form 1-U, and exit reports on Form 1-Z.
III. Economic Analysis
Regulation Crowdfunding and Regulation A permit offers and sales of
securities without registration under the Securities Act, subject to
certain limitations and conditions, including compliance with ongoing
reporting requirements. Based on staff analysis, between June 19, 2015
(the effective date of the most recent Regulation A amendments \7\) and
September 15, 2018, approximately 241 filers had Regulation A offering
statements qualified by the Commission, excluding withdrawn offerings.
Approximately 1,010 issuers initiated Regulation Crowdfunding offerings
with Form C filings between May 16, 2016 and August 31, 2018, excluding
issuers that have withdrawn offerings.\8\ Approximately 40 registered
intermediaries, including 31 registered funding portals and 9
registered broker-dealers, have participated in Regulation Crowdfunding
offerings with Form C filings between May 16, 2016 and August 31, 2018,
excluding withdrawn offerings.
---------------------------------------------------------------------------
\7\ SEC Rel. No. 33-9741 (Mar. 25, 2015) [80 FR 21806 (Apr. 20,
2015)].
\8\ These figures overstate the number of issuers with
obligations to file annual reports under Regulation Crowdfunding,
because they do not exclude issuers that have failed to raise the
target amount or have exited the reporting regime.
---------------------------------------------------------------------------
We lack the data to estimate the number of investors in Regulation
A or Regulation Crowdfunding offerings that could be affected if
issuers rely on the relief provided by the interim final temporary
rules, because information on the number of investors is generally not
required to be disclosed in periodic or current reports required under
Regulation A or in periodic reports or progress updates required under
Regulation Crowdfunding.\9\
---------------------------------------------------------------------------
\9\ Regulation A issuers that file Form 1-Z to suspend reporting
are required to disclose the number of shareholders of record.
---------------------------------------------------------------------------
We are mindful of the costs and benefits of the interim final
temporary rules.\10\ We believe the interim final temporary rules will
benefit issuers that have an obligation to file specified reports with
the Commission pursuant to either Regulation Crowdfunding or Regulation
A and have been adversely affected by Hurricane Florence or its
aftermath by permitting them to take additional time to meet their
reporting obligations. We expect the relief provided by the interim
final temporary rules will benefit issuers that, absent the relief,
would not be able to avail themselves of the exemption from
registration under Regulation Crowdfunding or Regulation A because the
timely filing of required reports is a condition to the exemptions. In
the absence of this relief, issuers could incur prohibitively high
costs in an attempt to meet filing deadlines given the lack of
communications, transportation, electricity, facilities, and available
staff and professional advisors.
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\10\ Section 2(b) of the Securities Act [15 U.S.C. 77b(b)]
requires the Commission, when engaging in rulemaking where it is
required to consider or determine whether an action is necessary or
appropriate in the public interest, to consider, in addition to the
protection of investors, whether the action will promote efficiency,
competition, and capital formation.
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The requirement for an issuer to disclose that it is relying on
Rule 202(c) of Regulation Crowdfunding or Rule 257(f) of Regulation A
and to state the reasons why, in good faith, it could not file a report
or form on a timely basis may impose minimal additional costs on
issuers availing themselves of this relief. However, we believe that
these minimal costs are justified in light of the significant negative
implications of not being able to rely on the exemption and the
prohibitively high costs an issuer may incur in attempting to file in a
timely manner.
We also acknowledge that there may be costs imposed on investors,
intermediaries, and other market participants due to delayed access to
information about offerings conducted in reliance on Regulation A and
Regulation Crowdfunding. Generally, reporting requirements strengthen
investor protection and decrease the extent of information asymmetries
between issuers and investors. Ongoing reporting provides investors
with periodically updated information, allowing them to assess
investment opportunities based on the information provided and their
level of risk tolerance, resulting in better informed investment
decisions and improved allocative efficiency. Given that the interim
final temporary rules allow for delayed reporting for a limited time
period and only under specified conditions, we do not believe such
costs will be significant.
The interim final temporary rules will not substantially affect
competition or capital formation. We acknowledge the possibility that
the interim final temporary rules may have a minor impact on
efficiency. On the one hand, as noted above, the delay in reporting
could marginally affect allocative efficiency to the extent that it
allows information asymmetries between investors and issuers to persist
for the length of time of the delay. On the other hand, we expect
efficiency gains to the extent that the interim final temporary rules
allow issuers to continue to rely on either of the exemptions from
registration that would not be available if one of the required reports
that is a condition to the exemptions was not filed in a timely manner,
or to the extent the issuers are able to avoid paying a premium to
service providers in an attempt to file in a timely manner by delaying
reporting during the specified relief period.
As an alternative to the relief specified in the interim final
temporary rules, we could have considered a longer or shorter relief
period. While a shorter period would have reduced the costs to
investors of asymmetric information, it would also reduce the benefits
of the interim final temporary rules to issuers. Similarly, a longer
period would increase the costs to investors. We believe that the
approximately nine-week delay in the interim final temporary rules is
appropriate given the potential impact Hurricane Florence or its
aftermath could have on the efforts of companies to meet filing
deadlines pursuant to Regulation Crowdfunding and Regulation A.
IV. Procedural and Other Matters
The Administrative Procedure Act (``APA'') generally requires an
agency to publish notice of a rulemaking in the Federal Register and
provide an opportunity for public comment. This requirement does not
apply, however, if the agency ``for good cause finds . . . that notice
and public procedure are impracticable, unnecessary, or contrary to the
public interest.'' \11\ The APA also generally requires that an agency
publish an adopted rule in the Federal Register at least 30 days before
it becomes effective. This requirement does not apply, however, if the
agency finds good cause for making the rule effective sooner.\12\
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\11\ 5 U.S.C. 553(b)(3)(B).
\12\ 5 U.S.C. 553(d)(3).
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Given the temporary nature of the relief contemplated by the
interim final temporary rules and the significant and immediate impact
of Hurricane Florence and its aftermath on issuers in affected areas,
as discussed above, the Commission finds that good cause exists to
dispense with notice and comment as impracticable and unnecessary, and
to act immediately to amend Rule 202 of Regulation Crowdfunding and
Rule 257 of Regulation A.\13\ Further, the interim
[[Page 47836]]
final temporary rules will not affect the burden or cost estimates
associated with existing collections of information under Regulation
Crowdfunding and Regulation A for purposes of the Paperwork Reduction
Act of 1995.\14\
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\13\ This finding also satisfies the requirements of 5 U.S.C.
808(2), allowing the interim final temporary rules to become
effective notwithstanding the requirement of 5 U.S.C. 801 (if a
federal agency finds that notice and public comment are impractical,
unnecessary or contrary to the public interest, a rule shall take
effect at such time as the federal agency promulgating the rule
determines). The interim final temporary rules also do not require
analysis under the Regulatory Flexibility Act. See 5 U.S.C. 604(a)
(requiring a final regulatory flexibility analysis only for rules
required by the APA or other law to undergo notice and comment).
\14\ 44 U.S.C. 3501 et seq.
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V. Statutory Basis and Text of Amendments
We are adopting amendments to Rule 202 of Regulation Crowdfunding
and Rule 257 of Regulation A under the authority set forth in the
Securities Act (15 U.S.C. 77a et seq.), particularly, Section 28
thereof.
List of Subjects
17 CFR Part 227
Crowdfunding, Funding portals, Intermediaries, Reporting and
recordkeeping requirements, Securities.
17 CFR Part 230
Reporting and recordkeeping requirements, Securities.
In accordance with the foregoing, title 17, chapter II of the Code
of Federal Regulations is amended as follows:
PART 227--REGULATION CROWDFUNDING, GENERAL RULES AND REGULATIONS
0
1. The authority citation for part 227 is revised to read as follows:
Authority: 15 U.S.C. 77d, 77d-1, 77s, 77z-3, 78c, 78o, 78q,
78w, 78mm, and Pub. L. 112-106, secs. 301-305, 126 Stat. 306 (2012).
0
2. Amend Sec. 227.202 by adding paragraph (c) to read as follows:
Sec. 227.202 Ongoing reporting requirements.
* * * * *
(c) Temporary relief from certain reporting requirements. (1) An
issuer that is not able to meet a filing deadline for any report or
form required to be filed by this section, 17 CFR 227.203(a)(3)), or 17
CFR 227.203(b) during the period from and including September 14, 2018
to and including October 26, 2018 due to Hurricane Florence and its
aftermath shall be deemed to have satisfied the filing deadline for
such report or form if the issuer files such report or form with the
Commission on or before October 29, 2018.
(2) In any report or form filed pursuant to paragraph (c)(1) of
this section, the issuer must disclose that it is relying on this
paragraph (c) and state the reasons why, in good faith, it could not
file such report or form on a timely basis.
PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933
0
3. The authority citation for part 230 continues to read in part as
follows:
Authority: 15 U.S.C. 77b, 77b note, 77c, 77d, 77f, 77g, 77h,
77j, 77r, 77s, 77z-3, 77sss, 78c, 78d, 78j, 78l, 78m, 78n, 78o, 78o-
7 note, 78t, 78w, 78ll(d), 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a-
30, and 80a-37, and Pub. L. 112-106, sec. 201(a), sec. 401, 126
Stat. 313 (2012), unless otherwise noted.
0
4. Amend Sec. 230.257 by adding paragraph (f) to read as follows:
Sec. 230.257 Periodic and current reporting; exit report.
* * * * *
(f) Temporary relief from ongoing reporting requirements. (1) An
issuer that is not able to meet a filing deadline for any report or
form required to be filed by 17 CFR 230.252(f)(2)(i)) or this section
during the period from and including September 14, 2018 to and
including October 26, 2018 due to Hurricane Florence and its aftermath
shall be deemed to have satisfied the filing deadline for such report
or form if the issuer files such report or form with the Commission on
or before October 29, 2018.
(2) In any report or form filed pursuant to paragraph (f)(1) of
this section, the issuer must disclose that it is relying on this
paragraph (f) and state the reasons why, in good faith, it could not
file such report or form on a timely basis.
By the Commission.
Dated: September 19, 2018.
Brent J. Fields,
Secretary.
[FR Doc. 2018-20740 Filed 9-19-18; 4:15 pm]
BILLING CODE 8011-01-P
