Letter to Mary Jo White, Chairman of the Securities and Exchange Commission - Preserving States' Investor Protections

Letter

December 4, 2014

The Honorable Mary Jo White, Chair
U.S. Securities and Exchange Commission
100 F Street, NE Washington, D.C. 20549

Dear Chair White:

You received a comment letter (enclosed) from Groundfloor Finance Inc. regarding the Securities and Exchange Commission's (SEC) proposed Regulation A+ rule (Release No.33-9497) and Groundfloor's concerns with the SEC's potential preemption of state law. As the first issuer to participate in the North American Securities Administrators Association's (NASAA) new Coordinated Review program, Groundfloor wrote that they "have found value in participating in the Coordinated Review program, and believe that other issuers will find the same."

In passing Title IV of the Jumpstart Our Business Startups Act of 2012, Congress balanced the need to promote small business capital formation by tailoring the public offering process, while preserving strong investor protections, including state regulator oversight for securities sold to retail investors. The state regulators have now done the same, by streamlining their own registration processes. Groundfloor notes that "Combined state and federal registration along with the new Coordinated Review program presents a threshold that legitimate businesses can meet, while creating a disincentive for speculative and unscrupulous issuers."

We strongly urge you to closely examine NASAA's Coordinated Review program, and not undermine crucial investor protections by preempting the states' regulators.

Sincerely,

Maxine Waters
Ranking Member

Stephen F. Lynch
Member of Congress

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