Two lawmakers are warning Securities and Exchange Commission Chairwoman Mary Jo White that the agency must withdraw several amendments governing the newly allowed hedge fund ads or run afoul of the law.
In a July 22 letter to SEC Chairwoman Mary Jo White, Rep. Patrick McHenry, R-N.C., chairman of the Financial Services Subcommittee on Oversight and Investigations, and Rep. Scott Garrett, R-N.J., chairman of the Financial Services Subcommittee on Capital Markets, take issue with Proposed Rule 503, which they say “requires private issuers to file a wildly expanded Form D 15 days before” they start advertising.
“Congress did not say that the commission can delay free speech for 15 days,” they wrote.
The lawmakers state that although they support the rule lifting the ban on hedge fund advertising, they request in their letter that the SEC withdraw Proposed Rule 503 “in order to uphold the intent of the law.”
Congress “specifically required the commission lift the ban on general solicitation for those Rule 506 offerings that solely target accredited investors and qualified institutional buyers,” they wrote, arguing that the waiting period is in effect a ban, and that completing the paperwork requires “hiring qualified counsel” and can stretch the wait far longer than 15 days.
They called the pre-filing requirement “yet another unnecessary burden that prevents small businesses from accessing capital that they need to grow and create jobs.”
Garrett said in the letter that the SEC’s “proposed amendments to Form D filings — over the objections of two commissioners — are not called for under Section 201 of the JOBS Act.”