The JOBS act, intended to empower small businesses and provide them with a way to raise often-unreachable funding, has been graced by the SEC (for the most part – Title III to get the green light soon!). However, the ability to get around individual state offering scrutiny through a Reg A+ Tier II offering, is not all it seems to be.
States such as Massachusetts have pushed hard against the preemption of state review, and have filed lawsuits against the SEC. However, many people (and small companies) have overlooked a detail that allows individual states to require notice filings for Tier II offerings, often accompanied by a fee. An example is Maine, requiring a 1,000 dollar fee. Other states require $500, $1000…
http://www.maine.gov/pfr/securities/licensing/registration_exemption_filings.htm
The intention of the JOBS Act was to allow small businesses to find funding, this money grab from the states seems to undermine the purpose of the Reg A+ exemption.
If more and more states continue to require notice filings (and fees), then businesses will be looking at a set of expenses that set this funding opportunity out of reach (imagine $500 x 50 states = $25,000 of additional expenses).
Whether or not this is a move by states to “get back at” the SEC for allowing state preemption through an SEC offering review, it is something that small businesses should keep in mind, as it is often overlooked and may come as a surprise after already spending big $$ on putting the offering material together, other legal fees, etc.