Like the Securities Exchange Commission (“SEC”) at the federal level, states have their own jurisdiction over securities offerings conducted within their boundaries. This can sometimes result in overlapping or additional disclosure requirements and duplicative or merit-based offering reviews by state securities regulators that can potentially add time, cost, and uncertainty to the offering process. For these reasons, in the 1990s, Congress enacted legislation that provided for the preemption (i.e., inapplicability) of state securities laws registration and qualification requirements in certain instances and delegated the SEC the authority to unilaterally do the same in limited circumstances. In 2012, Congress passed the Jumpstart Our Business Startups Act, which directed the SEC to promulgate new rules and added new instances of preemption to the federal securities laws.

Regulation A (“Reg A”) is an exemption from registration under the Securities Act of 1933 (the “Securities Act”) that allows companies to publicly offer and sell up to $50 million in securities annually to retail investors. But while Reg A offerings are exempt from registration, issuers who wish to take advantage of the exemption must qualify a substantive offering document (an offering statement on a Form 1-A) with the U.S. Securities and Exchange Commission (the “SEC”).