Corporation Finance Policy Project Group Update

July 9, 2011

Corporation Finance Policy Project Group

Dennis Britson (IA), ChairLisa Enright (ON)Sheri Palma (TX)Meredith Tweedie (DE)Jill Vallely (WA)Kaycee Wolf (AR)

11 Policies were updated in 2008

Consistency with Uniform Securities Act of 2002

Consistency with Sarbanes-Oxley ActMoving definitions to definitions SOPPlain english usageSimplificationUpdating cross-referencesHandout identifies the policies and highlights

the changes made in 2008

In Progress – Review Analyst Notes

Impoundment of ProceedsOptions and WarrantsPreferred StockPromoters EquityPromoters SharesSecurities DefinitionsUnderwriting ExpensesUnsound Financial Condition

In ProgressHealth Care Facility Offering PolicyProject Group will recommend repeal of the

SOPWe believe the policy is not being used and is

not necessary

In Progress

Model employee benefit plan exemptionProject group has a draft and will recommend

to the Corporation Finance Section Committee

To align with federal rule 701

In ProgressPerson to Person LendingNASAA provided information to the United

States Government Accountability Office as part of a study resulting from the Dodd-Frank Wall Street Reform and Consumer Protection Act

GAO is preparing a Statement of Facts on Person-To-Person Lending

Handout: February 14, 2011 Report by our project group – Michael Benson (PA) was the lead drafter.

Peer-To-Peer (P2P) Lending Platform - - the ServicerA platform – a website – offers opportunity to

purchase debt securities offered by a person or business.

Platform connects issuers with investors.Initial Model: Solely a conduit and issuer would issue

the note directly to the issuer.Current Model: Securitization with indenture trustee

holding promissory notes with servicer servicing loans and paying investors.

Loan contract is between the servicer and the issuer, not between the issuer and the investor.

Peer-To-Peer (P2P) Lending Platform - - the Servicer

Peer-to-Peer Lending allows individuals and small businesses to obtain unsecured loans that are funded by other people’s purchase of note securities.

Peer-To-Peer (P2P) Lending Platform - - the Servicer

The issuers in these offerings are placing offers using general solicitation – which in many states would preclude the ability to qualify for an exempt transaction.

Notably, the offer of securities is the first step in the process.

Who is the Issuer/Borrower?

Typically an individual or small business that posts a note listing with a brief narrative describing the anticipated use of the proceeds and their credit history.

Information is limited and tends to be unverifiable.

Who is the Investor/Lender?

A person seeking an investment through the peer-to-peer securitization platform.

Individuals or entities review note offerings and choose specific issuer postings to purchase.