Capital Raising in the U.S.: The Significance of Unregistered Offerings Using the Regulation D Exemption

Division of Risk, Strategy, and Financial Innovation White Paper

9 Pages Posted: 25 Aug 2012

See all articles by Scott W. Bauguess

Scott W. Bauguess

University of Texas at Austin - Department of Finance

Vladimir I. Ivanov

US Securities & Exchange Commission

Date Written: February 1, 2012

Abstract

In this report we present an analysis of the information extracted from Form D filings received by the Commission since the beginning of 2009. The results are intended to inform the Commission on the amount and nature of capital raised through unregistered offerings claiming a Regulation D exemption, and to provide some preliminary perspective on the state of competition and regulatory burden in capital markets. In particular, we compare the amount of capital raised using the Regulation D exemption to capital raised from other unregistered and registered offering methods. This information may be particularly useful in assessing the merit of current or potential future rulemaking activity. This analysis is not intended to inform the Commission on compliance with or enforcement of federal securities laws.

One of the original purposes of Regulation D, first adopted in 1982 and amended on three subsequent occasions, was to collect and analyze data on issuers seeking a 1933 Act registration exemption to address the capital formation needs of smaller companies. However, until 2008, issuers filed Form D on paper forms, making the extraction of information for large-scale statistical analysis problematic. In February 2008, the SEC adopted amendments to Form D that require issuers to submit their Form D filings electronically and in a structured data format. As a result of the new requirements, which were phased in from September 2008 through March of 2009, Form D filings are now machine-readable. Using basic text parsing tools, the Division of Risk, Strategy and Financial Innovation staff was able to extract the reported elements and place them in a database enabling the large-scale statistical analysis reported here.

Keywords: Regulation D, private offerings, capital raising

JEL Classification: G18, G38, G32

Suggested Citation

Bauguess, Scott W. and Ivanov, Vladimir, Capital Raising in the U.S.: The Significance of Unregistered Offerings Using the Regulation D Exemption (February 1, 2012). Division of Risk, Strategy, and Financial Innovation White Paper, Available at SSRN: https://ssrn.com/abstract=2135693 or http://dx.doi.org/10.2139/ssrn.2135693

Scott W. Bauguess (Contact Author)

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States

Vladimir Ivanov

US Securities & Exchange Commission ( email )

Washington, DC
United States
202-551-5307 (Phone)

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