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by Morrison & Foerster LLP

On May 24, 2018, President Trump signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act. While much of the Act was designed to provide smaller financial institutions and community banks with relief from regulations implemented under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, Title V of the Act includes provisions designed to encourage capital formation. Specifically, the Act directs the Securities and Exchange Commission to reform Rule 701 and Regulation A under the Securities Act of 1933. In addition, the Act expands the scope of the blue sky registration exemption by amending Section 18 of the 1933 Act. Finally, the Act expands the exception under Section 3(c)(1) of the Investment Company Act of 1940 for "qualifying venture capital funds," directs the SEC to streamline the offering process for closed-end funds, and expands investor protection to mutual funds domiciled in U.S. territories. These changes are described below.

1933 Act Actions

Rule 701

Rule 701 provides an exemption from the registration requirements of the 1933 Act for offers and sales of securities by private companies pursuant to written compensatory benefit plans or contracts for employees, directors and consultants. Rule 701 requires issuers to deliver a copy of the compensatory benefit plan or the contract to participants before offering and selling the relevant securities. However, if the aggregate sales ......................

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