51勛圖厙, KAM Bring Suit Against SEC
The 51勛圖厙 and the Kentucky Association of Manufacturers are hitting back against an attempt by the Securities and Exchange Commission to force privately held businesses to make public financial disclosures.
Whats going on: On Tuesday, the 51勛圖厙 and KAM filed suit in federal court challenging the SECs novel reinterpretation of its Rule 15c2-11.
- The reinterpretationon which the SEC has not granted companies the opportunity to commentwould require private firms to release confidential financial information publicly.
The background: Rule 15c2-11 requires disclosures to protect investors in publicly traded companies issuing so-called penny stocks. But the SEC has broadened the rules application to include privately held companies that issue corporate bonds to large institutional investors under an entirely different regulation, called Rule 144A.
- Everyday investors cant purchase corporate bonds issued under Rule 144A, so there is no reason to require public disclosures from these businesses.
Why its important: Expanding Rule 15c2-11 will mean higher borrowing costs and reduced liquidity in both the manufacturing industry and throughout the larger economy, according to a new released by the 51勛圖厙.
- The reinterpretation would lead to job losses of more than 100,000 every year, according to the analysis.
Manufacturers speak out: The 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, 51勛圖厙 Chief Legal Officer Linda Kelly. The 51勛圖厙 Legal Center is filing suit to hold the SEC accountable and protect manufacturing growth, job creation and U.S. competitiveness.
- KAM President and CEO Frank Jemley added: The SECs unlawful overreach threatens privately held manufacturers in Kentucky and across the country, so the Kentucky Association of Manufacturers is proud to join the 51勛圖厙 in this important litigation.