Richard W. Jones

Mr. Jones is an attorney with the Atlanta,Georgia law firm of Jones & Haley,P.C. Mr. Jones concentrates his practice on securities law matters,such as public offerings,IPO's,private placements,SEC compliance,broker/dealer and investment adviser regulation and hedge funds. For further information go to www.corplaw.net

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National Venture Exchange

             Historically,the SEC has made it difficult for purchasers of stock in private companies,to sell their stock.  This has restricted the liquidity available to private companies and it has been an impediment to growth and capital raising opportunities.

            In recent years,we have seen some high profile companies,such as Facebook,have privately traded stock in which the company facilitated transfers of that stock.  These cases have created an atmosphere of greater regulatory acceptance of the resale of private company securities (also known as “Restricted Securities”.)

            On Wednesday,the House Financial Services Committee passed a bill that would enable the creation of national venture exchanges for early stage growth companies.  The bill will soon be sent to the Full House of Representatives for a vote.

            Under the new Venture Exchange Bill early stage growth companies will be allowed to have their restricted securities purchased and sold on an exchange similar to transactions on the NASDAQ.  To some extent,this is a follow up to the recently expanded Regulation A Exemption,which allows securities sold under that exemption to be freely traded.  If the new law passes Regulation A securities as well as restricted securities initially sold pursuant to other exemptions may be purchased and sold in an exchange environment regulated by Securities &Exchange Commission. 

            The purpose of the new Venture Exchanges is to create liquidity for small businesses and to encourage capital formation in the private securities market.

            We believe that these measures will be a great boon to the private securities market and should help popularize private placements as a means of providing capital to small cap companies.

            Not many details have been revealed about the new legislation.  It is only applicable to early stage growth companies,which are defined as those with a capitalization of one billion dollars or less.  The legislation has not been approved by the Senate at this point,but we will be watching to see if Congress can deliver a bill to us that will provide liquidity and more investor interest in small cap companies.  We will keep you posted about any new developments.          

 

   Richard W. Jones is an Atlanta business lawyer and an Atlanta securities lawyer with the Atlanta,Georgia law firm of Jones &Haley,P.C.  He has over 30 years experience representing clients in securities and corporate matters.  Please see our website at www.corplaw.net.    Copyright© 2015 by Jones &Haley,P.C. all rights reserved.

 

 

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