Staff No-Action Letter Highlights Renewed Focus On SEC Regulation A

According to an article by Liz Walsh of Mayer Brown, a recent no-action letter from the SEC’s Division of Corporation Finance signals renewed regulatory attention to Regulation A, particularly regarding ongoing reporting obligations. On June 30, the Staff stated it would not recommend enforcement action against BirchBioMed Inc., a Regulation A Tier 2 issuer, for filing a Form 1-Z to terminate its reporting obligations, despite not meeting one technical requirement under Rule 257(d). This decision stemmed from the fact that BirchBioMed had no outstanding securities issued under Regulation A following a rescission offer and had returned all investor funds.

Typically, Rule 257(d) permits issuers with fewer than 300 shareholders and those currently filing to suspend reporting, except in a fiscal year when a Tier 2 offering was qualified and an annual report has not yet been filed. Although BirchBioMed’s offering was qualified in October 2024, and it had not yet filed its 2025 annual report, the absence of outstanding securities weighed heavily in favor of relief. The Staff acknowledged that there was no investor protection rationale for continued reporting in such circumstances.

This decision aligns with existing guidance under Compliance and Disclosure Interpretation 182.16 and suggests that the SEC may be open to practical flexibility when investor risk is not at stake. Meanwhile, the Small Business Capital Formation Advisory Committee is scheduled to discuss potential improvements to Regulation A at its meeting on July 22. The agenda also includes the challenges faced by founders who lack access to established capital networks.

These developments underscore the importance of closely tracking how the SEC applies existing rules and considers future adjustments. Although formal regulatory changes may not be imminent, Walsh suggests a more pragmatic approach to small business disclosures under Regulation A.