David N. Feldman

Flash: Court Shoots Down State Challenge to Reg A+ Rules

Very good news: the DC Circuit today rejected the effort by two states (Massachusetts and Montana) to invalidate the SEC’s rules enacted to implement Regulation A+ and Title IV of the Jumpstart Our Business Startups (JOBS) Act of 2012. We are waiting to review the actual decision, but the court’s decision, written by Judge Karen L. Henderson, said the SEC made rules that were not arbitrary or capricious, the grounds on which they were being challenged.

As I understand it, the states’ only choice at this point would be to appeal directly to the US Supreme Court. The Supremes take a very small percentage of cases seeking their involvement, though one cannot predict what MA and MO will seek to do. As we know, the states were supported and backed by the North American Securities Administrators Association (NASAA) which represents the securities regulators of all the states.

More to come after we review the decision. But this is a critically positive development for the continuing acceptance, growth and use of new Regulation A+ to help smaller companies grow, raise capital and create jobs.