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Innovation, Regulation and Preservation


Innovation, Regulation and Preservation

By: Steve Sadler, CEO of Allegiancy

October 06, 2014

As recently as eight or nine years ago, I would travel around the country to attend conferences with my colleagues. Why? Back then – even though it wasn’t all that long ago – we wanted to get together, and even if we were serving clients in the same markets, collaborate. We shared information. We brainstormed how we could be fresh and innovative for our clients.

We asked each other questions. Which sector should we invest in? How do I make my clients more money?

And in the financial sector – whether you handle securities or manage assets – making more money is a good thing, a noble cause. When you help make people more money, they largely contribute in more meaningful ways to the economy, to their communities (yes, more money does mean more jobs), and to their families.

But then something happened. A few people with no integrity gave our industry a bad name. Their unethical, sometimes even illegal, actions led to a loss of the public’s trust, and in return, regulators stepped in after it was too late and took over.

In the years since, conversations about innovation turned toward preservation. Why? The regulators were so aggressive that no one wanted to talk about being a pioneer because pioneers get arrows in their chests.

What we ended up with was something far worse than unproductive time. We ended up swallowed by a destructive culture. When innovation grinds to a halt, no one moves. No one prospers.

I’m happy to report that while nearly 80 percent of the conferences I attend still focus on regulations, I recently saw a small sign of the pendulum swinging back the other way.

I spoke at REISA’s 2014 Annual Conference in Las Vegas in September, participating in a general panel discussion, “What is the opportunity with Reg A+? Where are the accredited investor limits going? Is it Crowdfunding or 506(c)?”

The conference itself wasn’t groundbreaking – they host it every year. REISA, now ADISA (Alternative and Direct Investment Securities Association), is a trade association serving professionals who offer and distribute alternative investments. Members include broker-dealers, sponsors, registered investment advisors, registered representatives, financial advisors, lenders, real estate brokers, consultants, due diligence firms, investment advisors, accountants, law firms, technology firms and related personnel.

But at this conference, we were talking about Reg A+ to a larger crowd than I’ve seen in recent years. And to me, that showcased that our industry is starting to think differently again — becoming more willing to take risks to help clients and the economy.

I believe the Reg A+ (part of the Jumpstart our Business Startups (JOBS) Act — its rules are expected to be released any day now) is the catalyst that will usher in a new era for investors. Reg A+ increases the amount of capital a private company can raise through a public securities offering from $5 million to $50 million a year.

This is something we’ve long been preparing for, waiting for the right time to more publicly showcase how we, despite today’s regulatory environment, work to be innovative. We recently completed a successful Reg A offering under the existing rules, so that we could be one of the first companies in the nation – if not the very first – to offer $20 million in preferred equity securities under the new Reg A+ rules.

The additional capital we’ll raise will help us grow our firm faster, but Reg A+ is about much more than Allegiancy. Reg A+ is about opening doors for small businesses who previously couldn’t access the capital they needed to grow. More than 75 percent of the businesses in the U.S. economy have been locked out of the equity markets in the past.

Reg A+ is about creating jobs. And it’s about giving regular folks access to investments that only a handful of accredited investors have enjoyed up until now.

You may also be interested in:

Premium Whitepaper: What YOU Need to Know About Reg A+ TODAY

Press Release: Allegiancy CEO Steve Sadler To Speak About Potential of New Regulation A+ Rules at Upcoming Securities Conferences 

Press Release: Virginia Company Leads Nation in Revolutionary Changes in Small Business Growth


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