IS REGULATION A+ A RADICAL BREAK WITH THE PAST?

REGULATION A+ is garnering a lot of interest. But is it a breakthrough in any way?

In fact, no. The only real change it brings is that Regulation A+ offerings are exempt from state registration, or “blue sky.” Each state has its own standards to approve offerings to its residents. And those standards are in general “merit based.’ That means that state regulators, most of which have no idea how an actual business operates, or what makes a business workable, impose their judgment call on whether an offering is appropriate for their residents.  As it turns out, most of the states with the most money and population—where one would like to sell—have the strictest standards. So, going public, especially for a growing company with a lack of earnings, would have been difficult for any company not sponsored by a major underwriting firm and approved for listing on a stock exchange.

This is a huge benefit to Regulation A+

Without this one feature, Regulation A+ would be nothing special. It would be a Saturn as compared to a Chevrolet, not a Tesla. The Regulation A+ review process at the SEC is the same process used by the SEC for almost a century, except that filings are made electronically for the recent decades.

Regulation A+ is as good as there is right now, but in all honesty the entire going public regulatory framework is antiquated, takes too much time, is too expensive, and is a huge barrier to the growth of our economy.