82 FR 45722 - Regulation Crowdfunding and Regulation A Relief and Assistance for Victims of Hurricane Harvey, Hurricane Irma, and Hurricane Maria
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 189 (October 2, 2017)
Federal Register Volume 82, Issue 189 (October 2, 2017)
| Page Range | 45722-45725 | |
| FR Document | 2017-21094 |
[Federal Register Volume 82, Number 189 (Monday, October 2, 2017)] [Rules and Regulations] [Pages 45722-45725] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-21094] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION 17 CFR Parts 227 and 230 [Release No. 33-10416] Regulation Crowdfunding and Regulation A Relief and Assistance for Victims of Hurricane Harvey, Hurricane Irma, and Hurricane Maria AGENCY: Securities and Exchange Commission. ACTION: Interim final temporary rule. ----------------------------------------------------------------------- SUMMARY: We are adopting interim final temporary rules for issuers subject to [[Page 45723]] reporting obligations pursuant to Regulation Crowdfunding and Regulation A in order to address the needs of companies directly or indirectly affected by Hurricane Harvey, Hurricane Irma, or Hurricane Maria. The temporary rules extend the filing deadlines for specified reports and forms due pursuant to Regulation Crowdfunding and Regulation A for certain issuers. DATES: These rules are effective from September 28, 2017, through November 22, 2017. FOR FURTHER INFORMATION CONTACT: Zachary O. Fallon, Special Counsel, or Amy Reischauer, Special Counsel, Office of Small Business Policy, Division of Corporation Finance, at (202) 551-3460, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-3628. SUPPLEMENTARY INFORMATION: We are adopting amendments to Rule 202 \1\ of Regulation Crowdfunding \2\ under the Securities Act of 1933 (the ``Securities Act'') \3\ and Rule 257 \4\ of Regulation A \5\ under the Securities Act as interim final temporary rules. --------------------------------------------------------------------------- \1\ 17 CFR 227.202. \2\ 17 CFR 227 et seq. \3\ 15 U.S.C. 77a et seq. \4\ 17 CFR 230.257. \5\ 17 CFR 230.251 through 230.263. --------------------------------------------------------------------------- I. Introduction In late August 2017, Hurricane Harvey caused catastrophic damage along the Texas and Louisiana coast, in early September 2017, Hurricane Irma caused catastrophic damage to the U.S. Virgin Islands, Puerto Rico and the Florida coast, and, in mid-September 2017, Hurricane Maria caused additional catastrophic damage to the U.S. Virgin Islands and Puerto Rico. The storms and subsequent flooding have displaced individuals and businesses and disrupted communications and transportation across the affected regions. We are adopting these interim final temporary rules to address the needs of companies directly or indirectly affected by Hurricane Harvey, Hurricane Irma, or Hurricane Maria or their respective aftermaths that are subject to reporting obligations pursuant to Regulation Crowdfunding or Regulation A. Section 28 of the Securities Act provides that the Commission may, by rule or regulation, ``conditionally or unconditionally exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision or provisions of this title or of any rule or regulation issued under this title, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.'' \6\ --------------------------------------------------------------------------- \6\ 15 U.S.C. 77z-3. --------------------------------------------------------------------------- II. Temporary Relief From Filing Requirements for Issurers Subject to the Reporting Obligations of Regulation Crowfunding or Regulation A The lack of communications, transportation, electricity, facilities, and available staff and professional advisors as a result of Hurricane Harvey, Hurricane Irma, and Hurricane Maria could hamper the efforts of companies with reporting obligations to meet their filing deadlines pursuant to Regulation Crowdfunding or Regulation A. At the same time, investors have an interest in the timely availability of required information about these companies. While the Commission believes that the temporary relief from filing requirements provided by the amendments to Rule 202 of Regulation Crowdfunding \7\ and Rule 257 of Regulation A \8\ is both necessary in the public interest and consistent with the protection of investors, we remind companies that are the subject of the relief provided in these interim final temporary rules to continue to evaluate their obligations to make materially accurate and complete disclosures in accordance with the anti-fraud provisions of the federal securities laws. --------------------------------------------------------------------------- \7\ See Rule 202(c) of Regulation Crowdfunding. 17 CFR 227.202(c). \8\ See Rule 257(f) of Regulation A. 17 CFR 230.257(f). --------------------------------------------------------------------------- Accordingly, pursuant to Section 28 of the Securities Act, we are adopting interim final temporary rules providing that an issuer subject to the reporting requirements of either Regulation Crowdfunding or Regulation A is exempt from any requirement to file specified reports or forms with the Commission where the conditions below are satisfied: (a) The issuer is not able to meet a filing deadline due to Hurricane Harvey, Hurricane Irma, or Hurricane Maria or their respective aftermaths; (b)(i) For issuers affected by Hurricane Harvey, the issuer files with the Commission, on or before October 27, 2017, the report or form required to be filed pursuant to either Regulation Crowdfunding or Regulation A during the period from and including August 25, 2017 to and including October 26, 2017; (ii) For issuers affected by Hurricane Irma, the issuer files with the Commission, on or before November 8, 2017, the report or form required to be filed pursuant to either Regulation Crowdfunding or Regulation A during the period from and including September 6, 2017 to and including November 7, 2017; or (ii) For issuers affected by Hurricane Maria, the issuer files with the Commission, on or before November 22, 2017, the report or form required to be filed pursuant to either Regulation Crowdfunding or Regulation A during the period from and including September 20, 2017 to and including November 21, 2017; and (c) In any such report or form, the issuer discloses that it is relying on the interim final temporary rules and states the reasons why, in good faith, it could not file such report or form on a timely basis. For Regulation Crowdfunding, the relief includes annual reports on Form C-AR, progress updates on Form C-U, and termination of reporting on Form C-TR. For Regulation A, the relief includes post-qualification amendments required at least every 12 months after the qualification date to include updated financial statements, annual reports on Form 1- K, semi-annual reports on Form 1-SA, special financial reports on Forms 1-K or 1-SA, current reports on Form 1-U, and exit reports on Form 1-Z. III. Economic Analysis Regulation Crowdfunding and Regulation A permit offers and sales of securities without registration under the Securities Act, subject to certain limitations and conditions, including compliance with ongoing reporting requirements. Based on staff analysis, approximately 150 filers publicly filed Regulation A offering statements between June 19, 2015 (the effective date of the most recent Regulation A amendments \9\) and August 31, 2017 that have been qualified as of September 15, 2017. Approximately 418 issuers initiated Regulation Crowdfunding offerings with Form C filings between May 16, 2016 and August 31, 2017, excluding issuers that have withdrawn offerings.\10\ Approximately 28 registered intermediaries, including registered funding portals and registered broker-dealers, have participated in Regulation Crowdfunding offerings with Form C filings between May 16, 2016 and August 31, 2017, which includes offerings that may have been [[Page 45724]] subsequently terminated or failed to reach the target amount. --------------------------------------------------------------------------- \9\ SEC Rel. No. 33-9741 (Mar. 25, 2015) [80 FR 21806 (Apr. 20, 2015)]. \10\ These figures overstate the number of issuers with obligations to file annual reports under Regulation Crowdfunding, because they do not exclude issuers that have failed to raise the target amount or have exited the reporting regime. --------------------------------------------------------------------------- We lack the data to estimate the number of investors in Regulation A or Regulation Crowdfunding offerings that could be affected if issuers rely on the relief provided by the interim final temporary rules, because information on the number of investors is generally not required to be disclosed in periodic or current reports required under Regulation A or in periodic reports or progress updates required under Regulation Crowdfunding.\11\ --------------------------------------------------------------------------- \11\ Regulation A issuers that file Form 1-Z to suspend reporting are required to disclose the number of shareholders of record. --------------------------------------------------------------------------- We are mindful of the costs and benefits of the interim final temporary rules.\12\ We believe the interim final temporary rules will benefit issuers that have an obligation to file specified reports with the Commission pursuant to either Regulation Crowdfunding or Regulation A and have been adversely affected by Hurricane Harvey, Hurricane Irma, or Hurricane Maria or their respective aftermaths by permitting them to take additional time to meet their reporting obligations. We expect the relief provided by the interim final temporary rules will benefit issuers that, absent the relief, would not be able to avail themselves of the exemption from registration under Regulation Crowdfunding or Regulation A because the timely filing of required reports is a condition to the exemptions. In the absence of this relief, issuers could incur prohibitively high costs in an attempt to meet filing deadlines given the lack of communications, transportation, electricity, facilities, and available staff and professional advisors. --------------------------------------------------------------------------- \12\ Section 2(b) of the Securities Act [15 U.S.C. 77b(b)] requires the Commission, when engaging in rulemaking where it is required to consider or determine whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation. --------------------------------------------------------------------------- The requirement for an issuer to disclose that it is relying on Rule 202(c) of Regulation Crowdfunding or Rule 257(f) of Regulation A and to state the reasons why, in good faith, it could not file a report or form on a timely basis may impose minimal additional costs on issuers availing themselves of this relief. However, we believe that these minimal costs are justified in light of the significant negative implications of not being able to rely on the exemption and the prohibitively high costs an issuer may incur in attempting to file in a timely manner. We also acknowledge that there may be costs imposed on investors, intermediaries, and other market participants due to delayed access to information about offerings conducted in reliance on Regulation A and Regulation Crowdfunding. Generally, reporting requirements strengthen investor protection and decrease the extent of information asymmetries between issuers and investors. Ongoing reporting provides investors with periodically updated information, allowing them to assess investment opportunities based on the information provided and their level of risk tolerance, resulting in better informed investment decisions and improved allocative efficiency. Given that the interim final temporary rules allow for delayed reporting for a limited time period and only under specified conditions, we do not believe such costs will be significant. The interim final temporary rules will not substantially affect competition or capital formation. We acknowledge the possibility that the interim final temporary rules may have a minor impact on efficiency. On the one hand, as noted above, the delay in reporting could marginally affect allocative efficiency to the extent that it allows information asymmetries between investors and issuers to persist for the length of time of the delay. On the other hand, we expect efficiency gains to the extent that the interim final temporary rules allow issuers to continue to rely on either of the exemptions from registration that would not be available if one of the required reports that is a condition to the exemptions was not filed in a timely manner, or to the extent the issuers are able to avoid paying a premium to service providers in an attempt to file in a timely manner by delaying reporting during the specified relief period. As an alternative to the relief specified in the interim final temporary rules, we could have considered a longer or shorter relief period. While a shorter period would have reduced the costs to investors of asymmetric information, it would also reduce the benefits of the interim final temporary rules to issuers. Similarly, a longer period would increase the costs to investors. We believe that the approximately nine-week delay in the interim final temporary rules is appropriate given the potential impact Hurricane Harvey, Hurricane Irma, or Hurricane Maria or their respective aftermaths could have on the efforts of companies to meet filing deadlines pursuant to Regulation Crowdfunding and Regulation A. IV. Procedural and Other Matters The Administrative Procedure Act (``APA'') generally requires an agency to publish notice of a rulemaking in the Federal Register and provide an opportunity for public comment. This requirement does not apply, however, if the agency ``for good cause finds . . . that notice and public procedure are impracticable, unnecessary, or contrary to the public interest.'' \13\ The APA also generally requires that an agency publish an adopted rule in the Federal Register at least 30 days before it becomes effective. This requirement does not apply, however, if the agency finds good cause for making the rule effective sooner.\14\ --------------------------------------------------------------------------- \13\ 5 U.S.C. 553(b)(3)(B). \14\ 5 U.S.C. 553(d)(3). --------------------------------------------------------------------------- Given the temporary nature of the relief contemplated by the interim final temporary rules and the significant and immediate impacts of Hurricane Harvey, Hurricane Irma, and Hurricane Maria and their aftermaths on issuers in affected areas, as discussed above, the Commission finds that good cause exists to dispense with notice and comment as impracticable and unnecessary, and to act immediately to amend Rule 202 of Regulation Crowdfunding and Rule 257 of Regulation A.\15\ Further, the interim final temporary rules will not affect the burden or cost estimates associated with existing collections of information under Regulation Crowdfunding and Regulation A for purposes of the Paperwork Reduction Act of 1995.\16\ --------------------------------------------------------------------------- \15\ This finding also satisfies the requirements of 5 U.S.C. 808(2), allowing the interim final temporary rules to become effective notwithstanding the requirement of 5 U.S.C. 801 (if a federal agency finds that notice and public comment are impractical, unnecessary or contrary to the public interest, a rule shall take effect at such time as the federal agency promulgating the rule determines). The interim final temporary rules also do not require analysis under the Regulatory Flexibility Act. See 5 U.S.C. 604(a) (requiring a final regulatory flexibility analysis only for rules required by the APA or other law to undergo notice and comment). \16\ 44 U.S.C. 3501 et seq. --------------------------------------------------------------------------- V. Statutory Basis and Text of Amendments We are adopting amendments to Rule 202 of Regulation Crowdfunding and Rule 257 of Regulation A under the authority set forth in the Securities Act (15 U.S.C. 77a et seq.), particularly, Section 28 thereof. List of Subjects 17 CFR Part 227 Crowdfunding, Funding portals, Intermediaries, Reporting and recordkeeping requirements, Securities. [[Page 45725]] 17 CFR Part 230 Reporting and recordkeeping requirements, Securities. In accordance with the foregoing, title 17, chapter II of the Code of Federal Regulations is amended as follows: PART 227--REGULATION CROWDFUNDING, GENERAL RULES AND REGULATIONS 0 1. The authority citation for part 227 is revised to read as follows: Authority: 15 U.S.C. 77d, 77d-1, 77s, 77z-3, 78c, 78o, 78q, 78w, 78mm, and Pub. L. 112-106, secs. 301-305, 126 Stat. 306 (2012). 0 2. Amend Sec. 227.202 by adding paragraph (c) to read as follows: Sec. 227.202 Ongoing reporting requirements. * * * * * (c) Temporary relief from certain reporting requirements. (1) An issuer that is not able to meet a filing deadline for any report or form required to be filed by this section (Rule 202), Rule 203(a)(3) (Sec. 227.203(a)(3)), or Rule 203(b) (Sec. 227.203(b)), as applicable: (i) During the period from and including August 25, 2017 to and including October 26, 2017 due to Hurricane Harvey and its aftermath shall be deemed to have satisfied the filing deadline for such report or form if the issuer files such report or form with the Commission on or before October 27, 2017; (ii) During the period from and including September 6, 2017 to and including November 7, 2017 due to Hurricane Irma and its aftermath shall be deemed to have satisfied the filing deadline for such report or form if the issuer files such report or form with the Commission on or before November 8, 2017; or (ii) During the period from and including September 20, 2017 to and including November 21, 2017 due to Hurricane Maria and its aftermath shall be deemed to have satisfied the filing deadline for such report or form if the issuer files such report or form with the Commission on or before November 22, 2017. (2) In any report or form filed pursuant to paragraph (c)(1) of this section, the issuer must disclose that it is relying on this paragraph (c) (Rule 202(c) of Regulation Crowdfunding) and state the reasons why, in good faith, it could not file such report or form on a timely basis. PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933 0 3. The authority citation for part 230 continues to read in part as follows: Authority: 15 U.S.C. 77b, 77b note, 77c, 77d, 77f, 77g, 77h, 77j, 77r, 77s, 77z-3, 77sss, 78c, 78d, 78j, 78l, 78m, 78n, 78o, 78o- 7 note, 78t, 78w, 78ll(d), 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a- 30, and 80a-37, and Pub. L. 112-106, sec. 201(a), sec. 401, 126 Stat. 313 (2012), unless otherwise noted. * * * * * 0 4. Amend Sec. 230.257 by adding paragraph (f) to read as follows: Sec. 230.257 Periodic and current reporting; exit report. * * * * * (f) Temporary relief from ongoing reporting requirements. (1) An issuer that is not able to meet a filing deadline for any report or form required to be filed by Rule 252(f)(2)(i) (Sec. 230.252(f)(2)(i)) or this section (Rule 257), as applicable: (i) During the period from and including August 25, 2017 to and including October 26, 2017 due to Hurricane Harvey and its aftermath shall be deemed to have satisfied the filing deadline for such report or form if the issuer files such report or form with the Commission on or before October 27, 2017; (ii) During the period from and including September 6, 2017 to and including November 7, 2017 due to Hurricane Irma and its aftermath shall be deemed to have satisfied the filing deadline for such report or form if the issuer files such report or form with the Commission on or before November 8, 2017; or (ii) During the period from and including September 20, 2017 to and including November 21, 2017 due to Hurricane Maria and its aftermath shall be deemed to have satisfied the filing deadline for such report or form if the issuer files such report or form with the Commission on or before November 22, 2017. (2) In any report or form filed pursuant to paragraph (f)(1) of this section, the issuer must disclose that it is relying on this paragraph (f) (Rule 257(f) of Regulation A) and state the reasons why, in good faith, it could not file such report or form on a timely basis. By the Commission. Dated: September 27, 2017. Brent J. Fields, Secretary. [FR Doc. 2017-21094 Filed 9-28-17; 4:15 pm] BILLING CODE 8011-01-P
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it establishes temporary restricted Policies and Procedures (44 FR 11034; The Proposed Amendment
airspace at Fort Sill, OK, enhancing February 26, 1979); and (3) does not In consideration of the foregoing, the
safety and accommodating essential warrant preparation of a regulatory Federal Aviation Administration
military training during the U.S. Army’s evaluation as the anticipated impact is amends 14 CFR part 73 as follows:
MFIX 2018 exercise being held so minimal. Since this is a routine
December 4 through 15, 2017. matter that will only affect air traffic PART 73—SPECIAL USE AIRSPACE
History procedures and air navigation, it is
certified that this rule, when ■ 1. The authority citation for part 73
On February 23, 2017, the FAA promulgated, will not have a significant continues to read as follows:
published in the Federal Register a economic impact on a substantial Authority: 49 U.S.C. 106(f), 106(g); 40103,
notice of proposed rulemaking (NPRM) number of small entities under the 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR,
(82 FR 11417), Docket No. FAA–2016– criteria of the Regulatory Flexibility Act. 1959–1963 Comp., p. 389.
9591, to establish a temporary restricted
area designated to support hazardous Environmental Review § 73.56 Oklahoma (Amended)
training activities conducted during ■ 2. § 73.56 is amended as follows:
MFIX 2018 within the Fort Sill, OK, The FAA has determined that this
action of establishing a temporary * * * * *
special use airspace (SUA) complex.
Interested parties were invited to restricted area R–5602 which partially R–5602 Fort Sill, OK [Temporary]
participate in this rulemaking effort by overlays portions of the R–5601
restricted area complex at Fort Sill, OK, Boundaries. Beginning at lat.
submitting written comments on the 34°49′30″ N., long. 98°08′43″ W.; to lat.
proposal. No comments were received. qualifies for FAA adoption in
accordance with FAA Order 1050.1F, 34°36′36″ N., long. 98°08′43″ W.; to lat.
The Rule paragraphs 8–2 and 9–2, Adoption of 34°36′36″ N., long. 98°17′01″ W.; to lat.
The FAA is amending 14 CFR part 73 Other Agencies’ National 34°38′15″ N., long. 98°17′01″ W.; to lat.
to establish temporary restricted area R– Environmental Policy Act Documents, 34°38′15″ N., long. 98°37′57″ W.; to lat.
5602 in support of MFIX 2018 during and Written Re-evaluations, and 34°40′54″ N., long. 98°37′56″ W.; to lat.
the period of December 4 through 15, 7400.2L, paragraph 32–2–3. The 34°42′07″ N., long. 98°37′20″ W.; to lat.
2017, to contain hazardous laser purpose of temporarily creating and 34°43′21″ N., long. 98°36′02″ W.; to lat.
activities demonstrating counter UAS 34°43′30″ N., long. 98°35′40″ W.; to lat.
utilizing the temporary Restricted Area
capabilities. To effectively segregate 34°45′03″ N., long. 98°29′46″ W.; to lat.
(RA) is to safely segregate private and
nonparticipant air traffic from the 34°46′15″ N., long. 98°25′01″ W.; to lat.
commercial aircraft from above-the-
hazardous activities associated with 34°47′00″ N., long. 98°17′46″ W.; to lat.
horizon hazardous laser activities while
MFIX 2018 at Fort Sill, OK, the R–5602 34°46′45″ N., long. 98°17′01″ W.; to lat.
supporting the U.S. Army MFIX 2018
lateral boundaries overlie the R–5601A, 34°49′30″ N., long. 98°17′01″ W.; to the
planned for November 27 through
R–5601B, and a portion of R–5601F point of beginning.
December 15, 2017 (the proposed
restricted areas and extend Designated altitudes. 40,000 feet MSL
temporary RA R–5602 would be active
approximately 8 nautical miles (NM) to 60,000 feet MSL.
from December 4 through 15, 2017). The Time of designation. December 4–15,
east beyond the R–5601A and R–5601F FAA, after conducting an independent
eastern boundaries. R–5602 extends 2017, daily, by NOTAM.
review and evaluation of the United Controlling agency. FAA, Fort Worth
upward from 40,000 feet mean sea level States Army’s August 2017 Final ARTCC.
(MSL) to 60,000 feet MSL, is activated Supplemental Environmental Using agency. U.S. Army,
daily by a Notice to Airmen (NOTAM), Assessment for the Temporary Creation Commanding General, U.S. Army Fires
and is in effect only during the period and Utilization of Restricted Area R– Center of Excellence, Fort Sill, OK.
of December 4 through December 15, 5602 at Fort Sill, Oklahoma, has
2017. This rule adds ‘‘daily’’ to the determined that the Army’s Issued in Washington, DC, on September
‘‘Time of designation’’ for clarity. 22, 2017.
Supplemental EA and its supporting
Since R–5602 is a temporary area, it Rodger A. Dean, Jr.,
documentation adequately assesses and
will not be depicted on the Dallas–Ft. discloses the environmental impacts of Manager, Airspace Policy Group.
Worth Sectional Aeronautical Chart or the proposed action, including [FR Doc. 2017–20954 Filed 9–29–17; 8:45 am]
the IFR Enroute High Altitude Chart, H– evaluation of the establishment of BILLING CODE 4910–13–P
6. However, a notice and graphic airspace for temporary restricted
depiction will be published on the airspace area R–5602. Based on the
FAA’s SUA Web site at http:// evaluation for potential environmental SECURITIES AND EXCHANGE
www.faa.gov/sua and in the Notices to impact in the above-mentioned EA, the COMMISSION
Airmen Publication (NTAP) available FAA, as the Cooperating Agency,
online at http://www.faa.gov/air_traffic/ concluded that adoption of the EA for 17 CFR Parts 227 and 230
publications/notices/. the Temporary Creation and Utilization [Release No. 33–10416]
Regulatory Notices and Analyses of Restricted Area R–5602 is authorized
in accordance with 40 CFR 1506.3, Regulation Crowdfunding and
The FAA has determined that this
Adoption. Accordingly, FAA adopts the Regulation A Relief and Assistance for
regulation only involves an established
Army’s Supplemental EA and takes full Victims of Hurricane Harvey, Hurricane
body of technical regulations for which
Irma, and Hurricane Maria
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frequent and routine amendments are responsibility for the scope and content
necessary to keep them operationally that address the FAA’s airspace AGENCY: Securities and Exchange
current. It, therefore: (1) Is not a establishment action. Commission.
‘‘significant regulatory action’’ under List of Subjects in 14 CFR Part 73 ACTION: Interim final temporary rule.
Executive Order 12866; (2) is not a
‘‘significant rule’’ under Department of Airspace, Prohibited areas, Restricted SUMMARY: We are adopting interim final
Transportation (DOT) Regulatory areas. temporary rules for issuers subject to
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reporting obligations pursuant to extent that such exemption is necessary filed pursuant to either Regulation
Regulation Crowdfunding and or appropriate in the public interest, Crowdfunding or Regulation A during
Regulation A in order to address the and is consistent with the protection of the period from and including
needs of companies directly or investors.’’ 6 September 6, 2017 to and including
indirectly affected by Hurricane Harvey, November 7, 2017; or
Hurricane Irma, or Hurricane Maria. The II. Temporary Relief From Filing (ii) For issuers affected by Hurricane
temporary rules extend the filing Requirements for Issurers Subject to the Maria, the issuer files with the
deadlines for specified reports and Reporting Obligations of Regulation Commission, on or before November 22,
forms due pursuant to Regulation Crowfunding or Regulation A 2017, the report or form required to be
Crowdfunding and Regulation A for The lack of communications, filed pursuant to either Regulation
certain issuers. transportation, electricity, facilities, and Crowdfunding or Regulation A during
DATES: These rules are effective from available staff and professional advisors the period from and including
September 28, 2017, through November as a result of Hurricane Harvey, September 20, 2017 to and including
22, 2017. Hurricane Irma, and Hurricane Maria November 21, 2017; and
FOR FURTHER INFORMATION CONTACT: could hamper the efforts of companies (c) In any such report or form, the
Zachary O. Fallon, Special Counsel, or with reporting obligations to meet their issuer discloses that it is relying on the
Amy Reischauer, Special Counsel, filing deadlines pursuant to Regulation interim final temporary rules and states
Office of Small Business Policy, Crowdfunding or Regulation A. At the the reasons why, in good faith, it could
Division of Corporation Finance, at same time, investors have an interest in not file such report or form on a timely
(202) 551–3460, U.S. Securities and the timely availability of required basis.
information about these companies. For Regulation Crowdfunding, the
Exchange Commission, 100 F Street NE.,
While the Commission believes that the relief includes annual reports on Form
Washington, DC 20549–3628.
temporary relief from filing C–AR, progress updates on Form C–U,
SUPPLEMENTARY INFORMATION: We are
requirements provided by the and termination of reporting on Form
adopting amendments to Rule 202 1 of C–TR. For Regulation A, the relief
Regulation Crowdfunding 2 under the amendments to Rule 202 of Regulation
Crowdfunding 7 and Rule 257 of includes post-qualification amendments
Securities Act of 1933 (the ‘‘Securities required at least every 12 months after
Act’’) 3 and Rule 257 4 of Regulation A 5 Regulation A 8 is both necessary in the
public interest and consistent with the the qualification date to include
under the Securities Act as interim final updated financial statements, annual
temporary rules. protection of investors, we remind
companies that are the subject of the reports on Form 1–K, semi-annual
I. Introduction relief provided in these interim final reports on Form 1–SA, special financial
In late August 2017, Hurricane Harvey temporary rules to continue to evaluate reports on Forms 1–K or 1–SA, current
caused catastrophic damage along the their obligations to make materially reports on Form 1–U, and exit reports
Texas and Louisiana coast, in early accurate and complete disclosures in on Form 1–Z.
September 2017, Hurricane Irma caused accordance with the anti-fraud III. Economic Analysis
catastrophic damage to the U.S. Virgin provisions of the federal securities laws. Regulation Crowdfunding and
Islands, Puerto Rico and the Florida Accordingly, pursuant to Section 28 Regulation A permit offers and sales of
coast, and, in mid-September 2017, of the Securities Act, we are adopting securities without registration under the
Hurricane Maria caused additional interim final temporary rules providing Securities Act, subject to certain
catastrophic damage to the U.S. Virgin that an issuer subject to the reporting limitations and conditions, including
Islands and Puerto Rico. The storms and requirements of either Regulation compliance with ongoing reporting
subsequent flooding have displaced Crowdfunding or Regulation A is requirements. Based on staff analysis,
individuals and businesses and exempt from any requirement to file
disrupted communications and approximately 150 filers publicly filed
specified reports or forms with the Regulation A offering statements
transportation across the affected Commission where the conditions
regions. We are adopting these interim between June 19, 2015 (the effective
below are satisfied: date of the most recent Regulation A
final temporary rules to address the (a) The issuer is not able to meet a
needs of companies directly or amendments 9) and August 31, 2017 that
filing deadline due to Hurricane Harvey,
indirectly affected by Hurricane Harvey, have been qualified as of September 15,
Hurricane Irma, or Hurricane Maria or
Hurricane Irma, or Hurricane Maria or 2017. Approximately 418 issuers
their respective aftermaths;
their respective aftermaths that are initiated Regulation Crowdfunding
(b)(i) For issuers affected by Hurricane
subject to reporting obligations pursuant offerings with Form C filings between
Harvey, the issuer files with the
to Regulation Crowdfunding or May 16, 2016 and August 31, 2017,
Commission, on or before October 27,
Regulation A. excluding issuers that have withdrawn
2017, the report or form required to be
Section 28 of the Securities Act offerings.10 Approximately 28 registered
filed pursuant to either Regulation
provides that the Commission may, by intermediaries, including registered
Crowdfunding or Regulation A during
rule or regulation, ‘‘conditionally or funding portals and registered broker-
the period from and including August
unconditionally exempt any person, dealers, have participated in Regulation
25, 2017 to and including October 26,
security, or transaction, or any class or Crowdfunding offerings with Form C
2017;
classes of persons, securities, or filings between May 16, 2016 and
(ii) For issuers affected by Hurricane
transactions, from any provision or August 31, 2017, which includes
Irma, the issuer files with the
provisions of this title or of any rule or offerings that may have been
jstallworth on DSKBBY8HB2PROD with RULES
Commission, on or before November 8,
regulation issued under this title, to the 2017, the report or form required to be 9 SEC Rel. No. 33–9741 (Mar. 25, 2015) [80 FR
1 17
21806 (Apr. 20, 2015)].
CFR 227.202. 6 15 U.S.C. 77z–3. 10 These figures overstate the number of issuers
2 17 CFR 227 et seq. 7 See Rule 202(c) of Regulation Crowdfunding. 17 with obligations to file annual reports under
3 15 U.S.C. 77a et seq.
CFR 227.202(c). Regulation Crowdfunding, because they do not
4 17 CFR 230.257. 8 See Rule 257(f) of Regulation A. 17 CFR exclude issuers that have failed to raise the target
5 17 CFR 230.251 through 230.263. 230.257(f). amount or have exited the reporting regime.
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![45724 Federal Register / Vol. 82, No. 189 / Monday, October 2, 2017 / Rules and Regulations
subsequently terminated or failed to participants due to delayed access to IV. Procedural and Other Matters
reach the target amount. information about offerings conducted The Administrative Procedure Act
We lack the data to estimate the in reliance on Regulation A and
number of investors in Regulation A or (‘‘APA’’) generally requires an agency to
Regulation Crowdfunding. Generally, publish notice of a rulemaking in the
Regulation Crowdfunding offerings that reporting requirements strengthen
could be affected if issuers rely on the Federal Register and provide an
investor protection and decrease the opportunity for public comment. This
relief provided by the interim final extent of information asymmetries
temporary rules, because information on requirement does not apply, however, if
between issuers and investors. Ongoing the agency ‘‘for good cause finds . . . that
the number of investors is generally not reporting provides investors with
required to be disclosed in periodic or notice and public procedure are
periodically updated information, impracticable, unnecessary, or contrary
current reports required under
allowing them to assess investment to the public interest.’’ 13 The APA also
Regulation A or in periodic reports or
opportunities based on the information generally requires that an agency
progress updates required under
Regulation Crowdfunding.11 provided and their level of risk publish an adopted rule in the Federal
We are mindful of the costs and tolerance, resulting in better informed Register at least 30 days before it
benefits of the interim final temporary investment decisions and improved becomes effective. This requirement
rules.12 We believe the interim final allocative efficiency. Given that the does not apply, however, if the agency
temporary rules will benefit issuers that interim final temporary rules allow for finds good cause for making the rule
have an obligation to file specified delayed reporting for a limited time effective sooner.14
reports with the Commission pursuant period and only under specified Given the temporary nature of the
to either Regulation Crowdfunding or conditions, we do not believe such costs relief contemplated by the interim final
Regulation A and have been adversely will be significant. temporary rules and the significant and
affected by Hurricane Harvey, Hurricane The interim final temporary rules will immediate impacts of Hurricane Harvey,
Irma, or Hurricane Maria or their not substantially affect competition or Hurricane Irma, and Hurricane Maria
respective aftermaths by permitting capital formation. We acknowledge the and their aftermaths on issuers in
them to take additional time to meet possibility that the interim final affected areas, as discussed above, the
their reporting obligations. We expect Commission finds that good cause exists
temporary rules may have a minor
the relief provided by the interim final to dispense with notice and comment as
impact on efficiency. On the one hand,
temporary rules will benefit issuers that, impracticable and unnecessary, and to
as noted above, the delay in reporting
absent the relief, would not be able to act immediately to amend Rule 202 of
avail themselves of the exemption from could marginally affect allocative Regulation Crowdfunding and Rule 257
registration under Regulation efficiency to the extent that it allows of Regulation A.15 Further, the interim
Crowdfunding or Regulation A because information asymmetries between final temporary rules will not affect the
the timely filing of required reports is a investors and issuers to persist for the burden or cost estimates associated with
condition to the exemptions. In the length of time of the delay. On the other existing collections of information
absence of this relief, issuers could hand, we expect efficiency gains to the under Regulation Crowdfunding and
incur prohibitively high costs in an extent that the interim final temporary Regulation A for purposes of the
attempt to meet filing deadlines given rules allow issuers to continue to rely Paperwork Reduction Act of 1995.16
the lack of communications, on either of the exemptions from
transportation, electricity, facilities, and registration that would not be available V. Statutory Basis and Text of
available staff and professional advisors. if one of the required reports that is a Amendments
The requirement for an issuer to condition to the exemptions was not We are adopting amendments to Rule
disclose that it is relying on Rule 202(c) filed in a timely manner, or to the extent 202 of Regulation Crowdfunding and
of Regulation Crowdfunding or Rule the issuers are able to avoid paying a Rule 257 of Regulation A under the
257(f) of Regulation A and to state the premium to service providers in an authority set forth in the Securities Act
reasons why, in good faith, it could not attempt to file in a timely manner by (15 U.S.C. 77a et seq.), particularly,
file a report or form on a timely basis delaying reporting during the specified Section 28 thereof.
may impose minimal additional costs relief period.
on issuers availing themselves of this List of Subjects
As an alternative to the relief
relief. However, we believe that these 17 CFR Part 227
specified in the interim final temporary
minimal costs are justified in light of the
significant negative implications of not rules, we could have considered a Crowdfunding, Funding portals,
being able to rely on the exemption and longer or shorter relief period. While a Intermediaries, Reporting and
the prohibitively high costs an issuer shorter period would have reduced the recordkeeping requirements, Securities.
may incur in attempting to file in a costs to investors of asymmetric
timely manner. information, it would also reduce the 13 5 U.S.C. 553(b)(3)(B).
We also acknowledge that there may benefits of the interim final temporary 14 5 U.S.C. 553(d)(3).
be costs imposed on investors, rules to issuers. Similarly, a longer 15 This finding also satisfies the requirements of
period would increase the costs to 5 U.S.C. 808(2), allowing the interim final
intermediaries, and other market temporary rules to become effective
investors. We believe that the notwithstanding the requirement of 5 U.S.C. 801 (if
11 Regulation A issuers that file Form 1–Z to approximately nine-week delay in the a federal agency finds that notice and public
suspend reporting are required to disclose the interim final temporary rules is comment are impractical, unnecessary or contrary
jstallworth on DSKBBY8HB2PROD with RULES
number of shareholders of record. to the public interest, a rule shall take effect at such
12 Section 2(b) of the Securities Act [15 U.S.C.
appropriate given the potential impact time as the federal agency promulgating the rule
77b(b)] requires the Commission, when engaging in Hurricane Harvey, Hurricane Irma, or determines). The interim final temporary rules also
rulemaking where it is required to consider or Hurricane Maria or their respective do not require analysis under the Regulatory
determine whether an action is necessary or aftermaths could have on the efforts of Flexibility Act. See 5 U.S.C. 604(a) (requiring a final
appropriate in the public interest, to consider, in regulatory flexibility analysis only for rules
companies to meet filing deadlines required by the APA or other law to undergo notice
addition to the protection of investors, whether the
action will promote efficiency, competition, and pursuant to Regulation Crowdfunding and comment).
capital formation. and Regulation A. 16 44 U.S.C. 3501 et seq.
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![Federal Register / Vol. 82, No. 189 / Monday, October 2, 2017 / Rules and Regulations 45725
17 CFR Part 230 PART 230—GENERAL RULES AND DEPARTMENT OF HEALTH AND
REGULATIONS, SECURITIES ACT OF HUMAN SERVICES
Reporting and recordkeeping 1933
requirements, Securities. Food and Drug Administration
In accordance with the foregoing, title ■ 3. The authority citation for part 230
continues to read in part as follows: 21 CFR Part 876
17, chapter II of the Code of Federal
Regulations is amended as follows: Authority: 15 U.S.C. 77b, 77b note, 77c, [Docket No. FDA–2017–N–5153]
77d, 77f, 77g, 77h, 77j, 77r, 77s, 77z–3, 77sss,
PART 227—REGULATION 78c, 78d, 78j, 78l, 78m, 78n, 78o, 78o–7 note, Medical Devices; Gastroenterology-
78t, 78w, 78ll(d), 78mm, 80a–8, 80a–24, 80a– Urology Devices; Classification of the
CROWDFUNDING, GENERAL RULES
28, 80a–29, 80a–30, and 80a–37, and Pub. L.
AND REGULATIONS High Intensity Ultrasound System for
112–106, sec. 201(a), sec. 401, 126 Stat. 313
(2012), unless otherwise noted. Prostate Tissue Ablation
■ 1. The authority citation for part 227 * * * * * AGENCY: Food and Drug Administration,
is revised to read as follows: HHS.
■ 4. Amend § 230.257 by adding
Authority: 15 U.S.C. 77d, 77d–1, 77s, 77z– paragraph (f) to read as follows: ACTION: Final order.
3, 78c, 78o, 78q, 78w, 78mm, and Pub. L.
112–106, secs. 301–305, 126 Stat. 306 (2012). § 230.257 Periodic and current reporting; SUMMARY: The Food and Drug
exit report. Administration (FDA or we) is
■ 2. Amend § 227.202 by adding * * * * * classifying the high intensity ultrasound
paragraph (c) to read as follows: (f) Temporary relief from ongoing system for prostate tissue ablation into
reporting requirements. (1) An issuer class II (special controls). The special
§ 227.202 Ongoing reporting requirements. that is not able to meet a filing deadline controls that apply to the device type
* * * * * for any report or form required to be are identified in this order and will be
(c) Temporary relief from certain filed by Rule 252(f)(2)(i) part of the codified language for the
reporting requirements. (1) An issuer (§ 230.252(f)(2)(i)) or this section (Rule high intensity ultrasound system for
that is not able to meet a filing deadline 257), as applicable: prostate tissue ablation’s classification.
for any report or form required to be (i) During the period from and We are taking this action because we
filed by this section (Rule 202), Rule including August 25, 2017 to and have determined that classifying the
203(a)(3) (§ 227.203(a)(3)), or Rule including October 26, 2017 due to device into class II (special controls)
Hurricane Harvey and its aftermath will provide a reasonable assurance of
203(b) (§ 227.203(b)), as applicable:
shall be deemed to have satisfied the safety and effectiveness of the device.
(i) During the period from and filing deadline for such report or form We believe this action will also enhance
including August 25, 2017 to and if the issuer files such report or form patients’ access to beneficial innovative
including October 26, 2017 due to with the Commission on or before devices, in part by reducing regulatory
Hurricane Harvey and its aftermath October 27, 2017; burdens.
shall be deemed to have satisfied the (ii) During the period from and DATES: This order is effective October 2,
filing deadline for such report or form including September 6, 2017 to and 2017. The classification was applicable
if the issuer files such report or form including November 7, 2017 due to on October 9, 2015.
with the Commission on or before Hurricane Irma and its aftermath shall
FOR FURTHER INFORMATION CONTACT: John
October 27, 2017; be deemed to have satisfied the filing
deadline for such report or form if the Baxley, Center for Devices and
(ii) During the period from and Radiological Health, Food and Drug
including September 6, 2017 to and issuer files such report or form with the
Commission on or before November 8, Administration, 10903 New Hampshire
including November 7, 2017 due to Ave., Bldg. 66, Rm. G210, Silver Spring,
2017; or
Hurricane Irma and its aftermath shall MD 20993–0002, 301–796–6549,
(ii) During the period from and
be deemed to have satisfied the filing john.baxley@fda.hhs.gov.
including September 20, 2017 to and
deadline for such report or form if the including November 21, 2017 due to SUPPLEMENTARY INFORMATION:
issuer files such report or form with the Hurricane Maria and its aftermath shall
Commission on or before November 8, I. Background
be deemed to have satisfied the filing
2017; or deadline for such report or form if the Upon request, FDA has classified the
(ii) During the period from and issuer files such report or form with the high intensity ultrasound system for
including September 20, 2017 to and Commission on or before November 22, prostate tissue ablation as class II
including November 21, 2017 due to 2017. (special controls), which we have
Hurricane Maria and its aftermath shall (2) In any report or form filed determined will provide a reasonable
be deemed to have satisfied the filing pursuant to paragraph (f)(1) of this assurance of safety and effectiveness. In
deadline for such report or form if the section, the issuer must disclose that it addition, we believe this action will
issuer files such report or form with the is relying on this paragraph (f) (Rule enhance patients’ access to beneficial
Commission on or before November 22, 257(f) of Regulation A) and state the innovation, in part by reducing
reasons why, in good faith, it could not regulatory burdens by placing the
2017.
file such report or form on a timely device into a lower device class than the
(2) In any report or form filed basis. automatic class III assignment.
jstallworth on DSKBBY8HB2PROD with RULES
pursuant to paragraph (c)(1) of this The automatic assignment of class III
section, the issuer must disclose that it By the Commission.
occurs by operation of law and without
is relying on this paragraph (c) (Rule Dated: September 27, 2017. any action by FDA, regardless of the
202(c) of Regulation Crowdfunding) and Brent J. Fields, level of risk posed by the new device.
state the reasons why, in good faith, it Secretary. Any device that was not in commercial
could not file such report or form on a [FR Doc. 2017–21094 Filed 9–28–17; 4:15 pm] distribution before May 28, 1976, is
timely basis. BILLING CODE 8011–01–P automatically classified as, and remains
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Document Created: 2017-09-30 04:40:42
Document Modified: 2017-09-30 04:40:42
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Interim final temporary rule. | |
| Dates | These rules are effective from September 28, 2017, through November 22, 2017. | |
| Contact | Zachary O. Fallon, Special Counsel, or Amy Reischauer, Special Counsel, Office of Small Business Policy, Division of Corporation Finance, at (202) 551-3460, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-3628. | |
| FR Citation | 82 FR 45722 | |
| CFR Citation | 17
CFR
227 17 CFR 230 | |
| CFR Associated | Crowdfunding; Funding Portals; Intermediaries; Reporting and Recordkeeping Requirements and Securities |
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