Following the Stock Market Crash of 1929 (and the market excesses that preceded the Crash), in the midst of the Great Depression, Congress wrote the rules for public offerings of securities, in the Securities Act of 1933.

The statute, the companion statute in 1934, the Securities Exchange Act, and the related rule-making, have substantially structured the way public offerings have been conducted for the past 70 years.

There have been quite a few developments over that time – computers, the internet, and the creation of large and sophisticated securities markets, to name only three – and with its recent proposals to amend the securities offering process, the Securities Exchange Commission has taken steps to move the securities offering process into the modern era.

Among the key items in the SEC’s recent proposal (and you can download all 400 pages of it at the SEC’s website, if you are so inclined):

Permission for companies to distribute initial public offering prospectus information to investors electronically (a step that SEC Commissioner Harvey Goldschmidt estimated would save issuers $200 million per year).

Changes in the rules relating to “gun jumping” (communications by companies 30 days before a registration statement is filed with the SEC that historically have been treated as premature “offers” of securities), that will permit broader company communications.

Simplification of the offering process for larger, established public companies classified as “well known seasoned issuers.”

Permission for issuers to use summaries or non-traditional “free writing” prospectuses.

Unlike the Depression era, investors today have the ability to obtain significant detailed and up-to-date information about the companies in which they invest. The emphasis in the Sarbanes Oxley Act on accuracy and immediacy in public company filings, and the speed by which the information on public companies is able to be disseminated, created an environment that made the proposed changes possible.

The proposals permit the SEC to have a regulatory framework that addresses how recent developments such as electronic road shows, webcasts, or information stored or hyperlinked to a company website should be treated under the Securities Act.

Companies that are traditional vehicles for securities fraud, such as blank check companies, penny stock issuers, or shell companies, would be eligible to participate in the more relaxed offering processes.

The proposals have been released for public comment, with a 75-day period during which the SEC will take comments from the public. The SEC posed multiple questions in the proposing release, actively seeking public input on how the proposals could affect the investing and offering process.

Comments from the public will be posted on the SEC’s website, and will be available for the public to review. After the end of the comment period, the SEC will consider the comments in determining whether to adopt the proposals or to change them prior to adoption.

The primary beneficiaries of the simplified offering rules will be the “well known seasoned issuers,” which are companies that have a public float of $700 million in equity securities, or have issued $1 billion in debt over the prior three years.

Bruce Dravis is a partner at Downey Brand LLP, operating primarily in the firm's Sacramento and Roseville offices, specializing in corporate, securities and business law.