(In 8th paragraph corrects quote to say “aggressive” instead of “anti-aggressive”)
WASHINGTON, April 26 (Reuters) - U.S. Securities and Exchange Commission Chair Mary Jo White is pushing to adopt a rule that would ease advertising restrictions for private placements of securities by firms such as hedge funds, Bloomberg reported on Friday.
Such a move would likely incense investor advocacy groups, who have called for the proposal to be scrapped and rewritten, because it lacks important investor protections.
But it would appease U.S. House Republicans, who have been critical of the agency for dragging its feet on the rule, and missing a key July 2012 deadline for its implementation.
The lifting of the ban on “general solicitation” is required by the 2012 Jumpstart Our Business Startups, or JOBS Act, which relaxes a variety of securities regulations in an effort to help small businesses raise capital and go public.
By easing advertising rules for hedge funds and other firms, the law aims to make it easier for small businesses to reach new qualified investors.
The SEC last August had contemplated lifting the ban right away through an “interim final” rule and making tweaks later, but then-Chairman Mary Schapiro shied away from the idea after investor advocates complained.
SEC Commissioner Luis Aguilar, a Democrat, voted against the proposal at the time and has since become even more vocal about his concerns.
In a speech last week he said it was “fatally flawed” and represented the most “aggressive effort to exclude pro-investor initiatives” that he’s ever seen in his SEC career.
Quoting two people familiar with the matter, Bloomberg said on Friday that White is considering adopting the proposed rule as drafted, a move that would easily win support from the SEC’s two Republican commissioners, Dan Gallagher and Troy Paredes.
To address investor advocates’ concerns, White has been considering asking for a “concept release” to be issued to seek views on how to bolster investor protection, Bloomberg reported.
A concept release is a very early-stage form of rulemaking that asks the public to weigh in on a series of issues.
When reached by phone late Friday afternoon, Aguilar said he was unaware of what White’s sentiments were on the issue.
“I am not aware of any decision made by Chair White to go forward with the general solicitation proposal,” he said. “It would be surprising to me, and of course I would be very disappointed.” (Reporting by Sarah N. Lynch; Editing by Bernard Orr)