[Posted on October 2, 2007 - 5:32 PM]
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DiggThe U.S. Securities and Exchange Commission is considering a proposal that would require certain investment filings to be posted online. The proposal is an overhaul of the Regulation D rules governing private companies, investment firms and who can invest in them.
The full proposal is here, but for the media and companies trying to remain in stealth mode, the excitement over these changes revolves around Form D filings, which can be used to track investments in private companies. Companies have to file these forms when they raise private capital from individuals or venture firms.
Journalists love them because the forms disclose how much money a company raised and from whom. By contrast, companies trying to stay under the radar loathe them, because raising money could alert competitors, among others, about what they've been up to.
For now those filings moulder in a room at the SEC. Anyone trying to access the filings must get them by mail through the agency or swing by SEC headquarters at 100 F St. in Washington. Alternatively, Form D filings are also available through state securities boards, since they also track and require documentation when an issuer raises money from their residents. California even posts them online.
In other words, it's a real pain tracking down private funding info. compared with the ease of procuring public company filings. With the blogopshere, of course, time is the enemy. Many venture capital firms and other investors aren't opposed to electronic disclosure of Form D filings; meanwhile, some electronic data providers view the practice as a business opportunity, as evidenced by some of the comments registered with the SEC.
Angels, venture firms, what do you think? - Stacey Higginbotham
Link to the latest draft of proposed SEC Regulation D changes
See Aug. 23 post from Common Stock Not
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This would be a “public” database, yes? And, the SEC requires that these forms be filed if you wish to raise capital through a private placement. Agreed?
Did anyone note that on page 37379 of the document that the SEC has noted, “We propose to DELETE the current requirement that issuers identify owners of 10 percent or more of a class of their equity securities as “related persons”
Hmmm..that seems to take away a lot of interesting information–wouldn’t you agree?
Futher, the current section on “revenues” will now have an option to “Decline to disclose”. Hmmm…more information being taken away from the “public”.
Last, the SEC proposes (page 37381)”to eliminate the items requiring information on use of proceeds and expenses of offering because they do not yield information necessay for an evaluation of the claimed exemption or for rulemaking efforts”. Lordy, what VC lobbyist got that one in?
Now, I applaud the SEC for bringing the filing of Form D into the digital information age. However, the noted “exclusions” smacks of competitive concerns by outside entities and lobbying efforts by....someone...or something.
I’d also argue that providing this information would make the efforts of the state and fed regulators more efficient and would also enable researchers (and the public) to more efficiently research the private markets–--not keep them in the dark as some would prefer.