State Limited and Private Offering Exemptions: The Maryland Experience in a National Perspective

A limited or private offering of securities exempted from federal registration still may have to be registered in one or more states, because the state exemptions for these transactions are often different from the available federal exemptions. These differences, however, do not reflect a principled allocation of regulatory responsibilities between the Securities and Exchange Commission and the state securities administrators, but rather derive from historical, philosophical, and structural differences between the federal and state securities laws. Recent reforms of the federal exemptive system have produced new concern about the impact of these differences on the capital formation process, and have led to a reevaluation of the goals of state limited and private offering exemptions. Reevaluation of the exemptive scheme under the Maryland Securities Act in light of these developments has resulted in both statutory amendment and adoption of two new exemptive rules. The author, who was one of the draftsmen of these rules, explores their relation to the national and Maryland experience with state limited and private offering exemptions, and examines many of the novel questions of policy and practice generated by the new Maryland rules