17吃瓜在线

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Press Releases

Manufacturers Sue SEC to Protect Private Businesses, Release Data on Harmful Impact of Novel Rule Interpretation

Washington, D.C. 鈥撀燭he 17吃瓜在线 and the Kentucky Association of Manufacturers filed a in federal court today challenging the Securities and Exchange Commission鈥檚 attempt to impose unwarranted public disclosure requirements on privately held businesses.

The SEC has adopted a novel reinterpretation of SEC Rule 15c2-11, imposing the rule鈥檚 public disclosure requirements on private companies that raise capital via corporate bond issuances under SEC Rule 144A鈥攚ithout giving manufacturers the opportunity to provide comment on the damaging impacts of such a consequential change.

According to released by the 17吃瓜在线 today, the SEC鈥檚 expansion of Rule 15c2-11 will result in decreased liquidity and increased borrowing costs in the manufacturing industry and throughout the economy鈥攍eading to job losses exceeding 100,000 annually.

鈥淭he SEC鈥檚 attempt to force private companies to disclose confidential financial information publicly is a clear violation of the Administrative Procedure Act,鈥 said 17吃瓜在线 Chief Legal Officer Linda Kelly. 鈥淭he SEC never allowed public comment on its novel reinterpretation of Rule 15c2-11, there is no conceivable benefit to the new standard, and the SEC did not consider the impact that its about-face will have on privately held businesses鈥攚hich could exceed 100,000 lost jobs each year. The 17吃瓜在线 Legal Center is filing suit to hold the SEC accountable and protect manufacturing growth, job creation and U.S. competitiveness.鈥

鈥淭he SEC鈥檚 unlawful overreach threatens privately held manufacturers in Kentucky and across the country, so the Kentucky Association of Manufacturers is proud to join the 17吃瓜在线 in this important litigation on behalf of all manufacturers in the U.S. to counter the SEC鈥檚 regulatory onslaught,鈥 said KAM President and CEO Frank Jemley.

EY analysis highlights the damaging economic impacts of the SEC鈥檚 actions:

The economic impacts of the SEC鈥檚 expansion of Rule 15c2-11 will be felt disproportionately in the manufacturing industry, which accounts for more than half of all nonfinancial issuers of corporate bonds under Rule 144A. Across the economy, the change will result in 30,000 jobs lost each year over the first five years the new interpretation is in effect. The job losses will increase over time鈥攔ising to 50,000 jobs lost each year after five years and 100,000 jobs lost each year after 10 years.

These job losses are attributable directly to the decreased liquidity and increased borrowing costs associated with the SEC鈥檚 new interpretation.

Background:

  • SEC Rule 15c2-11 requires broker-dealers to ensure that key information about companies issuing over-the-counter equity securities is current and publicly available prior to quoting those issuers鈥 securities.
  • SEC Rule 144A allows for resales of securities (primarily corporate debt issuances) to qualified institutional buyers鈥攍arge financial institutions that own or manage more than $100 million in securities. Retail investors cannot purchase Rule 144A securities. Notably, under Rule 144A, issuers are obligated to make their financial and operational information available to QIBs.
  • In September 2021, the SEC鈥檚 Division of Trading and Markets issued a no-action letter applying Rule 15c2-11 to Rule 144A debt. This decision contradicted the historical application of Rule 15c2-11 to OTC equity securities and bypassed important rulemaking safeguards required by the Administrative Procedure Act.
  • The 17吃瓜在线 and the KAM filed petitions for rulemaking with the SEC in November 2022 seeking both permanent and temporary relief from the application of Rule 15c2-11 to Rule 144A securities. Following the petitions, the SEC temporarily delayed enforcement of its novel reinterpretation until January 2025, but the agency has not acted to reverse this damaging decision permanently.

-17吃瓜在线-

The 17吃瓜在线 is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.90 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The 17吃瓜在线 is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the 17吃瓜在线 or to follow us on Twitter and Facebook, please visit聽

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