June 24, 2019
Dear SEC Commission,
Speaking as an active participant in the private securities industry as an issuer, investor, and a business owner of private markets infrastructure technology, I think the SEC has done a great job to promote a safe and friendly environment for capital markets to thrive. However, I also believe there are existential flaws with the framework preventing better market conditions from forming. While the JOBS Act fostered new access for retail investors and improved exemptions with general solicitation, there is still more that can be done to address the rapidly evolving private securities industry.
By leveraging the aforementioned exemptions with technology designed for fundraising, issuers are now able to bring offerings online and access a global audience of investors. This trend, portrayed by the creation of funding portals to become online intermediaries and the use of general solicitation by the market to raise $211 billion - largely facilitated online - can only be seen as private capital markets yearning for greater access to investors. Retail investors and even accredited investors have barriers today that prevent more participation to fulfill this demand. These barriers exist in several forms ranging from investor inequality to rules preventing issuer adoption. Examples include the limit on the number of shareholders before having to register, the narrow definition of an accredited investor, and the lack of access for retail investors to truly participate as equals in private securities.
By updating the framework to expand the definition of accredited investors to allow more participants to qualify upon sale, improving issuer capacity to fundraise by removing shareholder size limits, and amending the exemptions to allow for more retail investor participation, I believe the US private capital markets will become more efficient, competitive, and safe for investors, all while encouraging capital formation.
I kindly urge you to recognize the theme that efficient private capital markets are driven by fair capital markets with greater access for all investors. In doing so, the SEC can better work with the industry to enact changes that will reflect this mission and create a positive impact for issuers, investors, and the US economy.
Sincerely,
Herwig Konings