Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, April 10, 2012

SEC Report Examines Significance of Reg D Offerings in Raising Capital

The SEC posted on its website a report, prepared by the Division of Risk, Strategy, and Financial Innovation, analyzing Reg D offerings since 2009, based on information contained in Form D filings.  (Download Sec_analysis-reg-d-offering[1]) Among its findings:

• In 2010, Reg D offerings surpassed debt offerings as the dominant offering method in terms of aggregate amount of capital raised in the U.S.: $905 billion.
• The amount of capital raised through Reg D offerings may be considerably larger than what is disclosed on Form D because there is no closing filing requirement.
• The median Reg D offering is modest in size: approximately $1 million.
• Consistent with the original intent of Regulation D to target the capital formation needs of small business, there have been a large number of smaller offerings: 37,000 unique offerings since 2009.
• There is a strong presence of foreign issuers in the Reg D offering market. Over the period 2009 to first quarter of 2011, they account for approximately 25% of capital raised.
• Among broader trends in capital raising, there has been a shift from public to private capital raising over the past three years, due to both a decline in public issuances and an increase in private issuances: public issuances fell by 11% from 2009 to 2010 while private issuances increased by 31% over the same period.
• Although capital raised in the U.S. by domestic issuers is almost twice that raised by foreign issuers, the capital raised by foreign issuers increased by 5% from 2009 to 2010, accounting for nearly the entire increase in total capital raised in the U.S. during the period. This is evidence that the current regulatory environment is not pushing capital formation offshore; rather, this evidence is more consistent with the U.S. competing favorably with foreign markets.

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