SEC Keeps Dusty Rule for Unused Investment Ads: Zzz
Published Date: 8/11/2025
Notice
Summary
The SEC is asking to keep the current rule that requires small business investment companies (SBICs) and business development companies (BDCs) to send their sales materials to the SEC five days before using them. This rule helps protect investors by making sure sales pitches aren’t misleading. No one has filed under this rule recently, so there’s no extra cost or time burden expected.
Analyzed Economic Effects
5 provisions identified: 3 benefits, 2 costs, 0 mixed.
Regulation E $5,000,000 offering cap
Regulation E exempts securities issued by an SBIC or a BDC from registration if the aggregate offering price of all securities that may be sold within a 12-month period does not exceed $5,000,000 and other conditions are met.
Five-day SEC pre-filing rule
If you are a small business investment company (SBIC) or a business development company (BDC) offering securities under Regulation E, you must file sales materials with the SEC at least five days (excluding weekends and holidays) before using them. The SEC staff reviews those materials for materially misleading statements and omissions.
SEC review protects investors
The SEC staff reviews sales materials filed under Rule 607 to check for materially misleading statements and omissions, which helps protect investors from false or misleading sales pitches for Regulation E offerings.
Sales-material threshold over ten people
Communications count as sales material under Rule 607 when they are to be given or otherwise communicated to more than ten persons — including advertisements, radio or TV scripts, and letters — and such materials must be filed five days before use.
SEC estimates negligible filing burden
The SEC reports no filings under Rule 607 in 2022, 2023, or 2024 and estimates an annual paperwork burden of one hour per respondent for electronic filing of sales materials.
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