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Published: Monday, 4/11/2011

SEC reviews rules on private firms


DALLAS — The Securities and Exchange Commission is considering whether to ease rules on private companies that issue shares.

Chairman Mary Schapiro said during a speech Friday that she has asked the SEC staff to review the rules. The changes might make it easier for companies such as Facebook and Twitter to raise money by issuing stock, without facing costly reporting rules imposed on public companies.

Private companies can keep their finances secret if they have fewer than 500 shareholders. If they have more, they must provide details on their companies and finances.

The new rules might replace the process by which technology companies and other startups offer shares publicly through initial public offerings. Companies that have IPOs must disclose financial details about themselves.

Earlier this week, Ms. Schapiro sent a letter to Rep. Darrell Issa, R-Calif., notifying him of the review. Issa, who is chairman of the House Oversight and Government Reform Committee, had previously raised concerns with Schapiro that the current rules discourage investment and limit economic growth

The rules are designed to stop insiders from trading shares using information that is not available publicly.

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