SEC Will Share Information with States for Securities Enforcement
The SEC and NASAA, the organization of state securities regulators, have signed an information-sharing agreement, intended to facilitate monitoring of compliance with the new crowdfunding rules and “to guard against fraud.” The parties have agreed to use non-public information “to inform any investigation, examination, proceeding, or civil action.” The agreement will “strengthen collaboration among state and federal securities regulators” and assist “in monitoring and evaluating new and amended exemptions at the state and federal level.”
OUR TAKE: This agreement is more significant that it appears. The state regulators have generally opposed relaxing the securities laws. The SEC, by agreeing to share, gives the state regulators free reign to assume primary responsibility for crowdfunding enforcement. State securities regulators, which can often be more aggressive than the SEC, could, through aggressive enforcement, undermine the original goal of the legislation, which was to facilitate capital raising.