ICI Supports Single Private Placement Regime for EU

Washington, DC, June 29, 2007 - The Institute supports the efforts of the European Commission to develop a private placement regime for the European Union that will strengthen the EU's single market framework without compromising investor protection.

Background
In a white paper on enhancing the single market framework, the European Commission agreed to undertake a systematic analysis of national barriers to private placement. In private placement transactions, securities can be sold privately to a limited number of eligible investors. As part of its analysis, the Commission published a "Call for Evidence Regarding Private Placement Regimes in the EU" seeking public views and evidence on the necessity and feasibility of a European private placement regime.

The report found that proper arrangements for private placement could be particularly helpful in freeing up cross-border transactions in non-harmonized investment funds or institutional products such as private equity investments that are not suitable for the retail investor. Legal uncertainty and barriers to cross-border business with regard to private placement are considered factors that increase the costs of raising money, particularly by inflating legal and advisory fees. These higher organizational costs, in turn, impact negatively on the returns available to investors.

ICI Position
The Institute strongly supports the efforts of the Commission to develop a private placement regime for the EU. In a comment letter, ICI outlines the benefits of a single private placement regime, and urges the Commission to move forward expeditiously.

Specifically, ICI support the Commission's efforts to establish sufficiently high sophisticated investor standards to ensure that privately placed securities are only available to persons with the ability to understand and bear the risks of such investments. ICI agrees that the offer of securities through a private placement must be distinguishable from a public offering, and strongly supports standards that would prohibit general solicitations or general advertising. The Institute believes that antifraud principles are important to ensure minimum standards for investor protection. ICI urges the Commission to identify clear and well-defined elements for the regime (e.g., definitions of sophisticated investors and general solicitation) to minimize the possibility of divergent implementation.

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