SEC Proposal: Improving Access to Capital in Private Markets

March 30, 2020

On March 4, 2020, the SEC voted 3-1 to propose amendments to “simplify, harmonize, and improve certain aspects” of the framework for offerings exempt from Securities Act registration.

The amendments cover a number of areas, including integration, general solicitation and offering communications, and Rule 506(c) verification requirements.  We discuss below selected key aspects of the proposal. 


The SEC first articulated the concept of integration in 1933 and has subsequently developed various approaches for determining when multiple offerings should be treated as a single offering. These approaches include:

  • The well-known five-factor test in Regulation D – whether:
    • the different offerings are part of a single plan of financing;
    • the offerings involve issuance of the same class of security;
    • the offerings are made at or about the same time;
    • the same type of consideration is to be received; and
    • the offerings are made for the same general purpose.
  • The 2007 guidance for analyzing the integration of simultaneous registered and private offerings:
    • The filing of a registration statement should not be considered general solicitation that undermines the availability of the Section 4(a)(2) exemption for a concurrent private placement if the private placement investors were not solicited by the registration statement.
    • A prospective investor could become interested in the concurrent private placement through a “pre-existing, substantive relationship” with the issuer, or direct contact by the issuer or its agents outside the public offering effort.
    • The integration framework for concurrent exempt offerings developed as part of promulgating Regulation A and Crowdfunding rules in 2015 and Rule 147 and 147A in 2016 that focused on facts and circumstances, including each offering complying with the requirements of the relevant exemption.

Please click here to read the full alert memorandum.

This article was republished by Harvard Law School Forum on Corporate Governance and Financial Regulation.