11 Jul New York Times Criticizes SEC Over General Solicitation Rules

In a surprisingly granular discussion for the editorial page of the venerable New York Times, it seems the Old Gray Lady is not happy with new SEC Chair Mary Jo White. In an editorial entitled “You’ve Been Warned,” the editors today sharply criticized Ms. White over the rules passed yesterday ending the ban on general solicitation and advertising in private offerings and banning “bad actors” from participating in those offerings. Both rules were required under various Congressional mandates.

Why critical? The editors believe the SEC should have mandated some kind of third party verification of accredited investor status, required to be allowed to advertise a private offering. Instead the rule just gives you a safe harbor if you do so, but lets you choose other unspecified methods. They also don’t like that the bad actor rule is not retroactive and only applies to people who do bad things after today. They even criticize the new proposed rule which would sharply increase the filing obligations of those choosing to advertise private offerings, saying that should have been included in the final rule approved, rather than opening up the proposal to comments.

I must say I was surprised that the bad actor rule was not made retroactive, but that may be what Chair White needed to get the thing passed. And I do believe the new passed rule ending the ban on solicitation struck a very fair balance between offering safe methods to verify accredited status but allowing the marketplace to develop its own reasonable methods for doing so. Once I get through these hundreds of pages of final and proposed rules I will have more to say. But in sum I don’t think the Times‘ criticisms are fair.