Abstract
This Comment argues that the explosive growth of Regulation D private offerings has outpaced the investor-protection foundations of federal securities laws. With minimal required disclosure and a lack of regulatory oversight, the Regulation D framework creates material information asymmetries
for and collective action problems among investors. Previous reform proposals—expanding Form D requirements, conditioning exemptions on more filings, and forcing private companies into public-company-style reporting—either risk exceeding the SEC’s delegated authority or fail to address investors’ abilities to access and appropriately evaluate material information.
To better balance capital formation and investor protection, this Comment proposes a tiered Regulation D framework keyed to offering size. For smaller offerings, Form D would be modestly expanded to provide investors with more reliable information. For larger offerings, issuers would choose between a targeted disclosure track and a novel corporate governance solution, an Offering Advisory Board. The Offering Advisory Board would conduct independent financial and technical diligence to provide investors with a plain-language report subject to executive certification. This approach could mitigate investor information asymmetries and weed out bad actors while preserving the dynamism of the private market.
