Exemptions from Securities Act Registration

Abstract

This chapter addresses the convoluted SEC exemption framework and offers measures for effective reform. During the past four decades, Congress and the SEC have engaged in piecemeal alterations to the exemption framework. As a consequence, the exemption framework lacks clarity and unduly favors capital formation at the expense of investor protection. The chapter accordingly focuses on the exemption framework for both primary offerings and resales of securities. Its objectives are to explain why the current regimen is incompatible with the best interests of investors and the securities markets as well as to recommend the implementation of a revised framework that effectuates a more sound exemption framework. Hence, as set forth herein, the SEC’s exemption framework should be restructured so that the exemptions are tailored in a balanced manner that satisfies both issuer and investor needs.