Joint Trades Letter to the Senate Banking Committee Regarding the SEC's Rule 15C2-11

The undersigned associations write to express our strong concerns with a surprising new rule interpretation, recently issued by staff at the Securities and Exchange Commission (“SEC”), that conflicts with existing regulation, will force private companies to make public disclosures, and will directly harm businesses’ ability to raise capital for job-creating projects. This change constitutes a reversal of 50 years of SEC policy and will have far-reaching implications, yet it was adopted without input from the public or any analysis of its potential impacts. If Congress does not step in to reverse this erroneous and damaging staff interpretation before it takes effect in January 2023, private companies will be forced to publicly disclose competitively sensitive information and will face new barriers to capital formation—significantly limiting their growth potential and imposing direct consequences on their ability to create jobs here in the U.S. What is more, the new interpretation will provide no additional protection for investors, given that retail investors cannot participate in the private placements implicated by the change—and the institutional investors who can participate will face increased costs and decreased value as a result of the staff’s actions.