House Bills Could Make IPOs And Private Offerings Easier

Eliza Fromberg was quoted in an article, "House Bills Could Make IPOs And Private Offerings Easier," published in Law360. The article discusses two bills recently passed by the U.S. House of Representatives which aim to make initial public offerings easier, while also expanding the population eligible to invest in pre-IPO companies. Fromberg spoke with Law360 about one of those bills, the Fair Investment Opportunity Act. The bill would enable more people to invest in private placements under the SEC's Regulation D exemption by widening the criteria for defining an accredited investor to include licensed and registered brokers, as well as individuals with professional knowledge related to a particular investment. Fromberg told Law360 that including investment professionals as accredited investors makes sense. But she added that deciding whether someone has "professional knowledge" in order to invest in private securities would be more subjective. "I think the 'professional knowledge' prong will be difficult to implement, since it requires correlating a person's experience to a particular investment, which requires a case-by-case determination," Fromberg told Law360. "This type of verification is time-consuming, and FINRA is not well suited to conduct this review."