Venture Industry Cool to Easing Rules on Private Company Stock

News that the Securities and Exchange Commission is considering easing limitations on the sale of stock by private companies is a further sign that the Obama administration is conducting a sweeping review of the ability of growing, young businesses to tap capital markets.

But unlike the Treasury Department’s interest in improving access to public markets–-which has led former National Venture Capital Association Chairwoman Kate Mitchell to form a task force to develop recommendations–-the SEC initiative could make staying private more compelling, which is not something the venture industry wants.

NVCA President Mark Heesen reacted coolly to the SEC’s plans, outlined in an April 6 letter from SEC Chairwoman Mary Schapiro to U.S. Rep. Darrell Issa (R, Calif.), chairman of the House Committee on Oversight and Government Reform. Schapiro said the SEC is reviewing the ban on general solicitation of private offerings and the number of shareholders, currently 500, that trigger public reporting, among other issues.

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