A la Comisión Nacional de Valores
Subgerencia de Emisiones de Renta Fija,
Gerencia de Emisoras, la Subgerencia de Normativa y
Gerencia de Asuntos Legales
S / D

Ref.: ELABORACIÓN PROYECTO DE RESOLUCIÓN GENERAL S/ REGLAMENTACIÓN DE OFERTA PRIVADA (ARTÍCULO 82 DE LA LEY Nº 26.831 Y MOD.)

Att.: Ms. Maria Laura Porto
Mr. Pablo Mercante

The Securities Industry and Financial Markets Association and its Asset Management Group (“AMG”) (together, “SIFMA”)¹² and the Managed Funds Association (MFA, and, with SIFMA, “we”)³ appreciate the opportunity to express our opinions on General Resolution No. 1009/2024 regarding the adoption of a regulation on the private offering of marketable securities.

General Resolution 1009 – CNV

We support the goals of the recent resolution issued by the CNV. This initiative has the potential to mark a pivotal moment in the
evolution of Argentina’s capital market, ushering in a new era of transparency, efficiency, and investor protection. We believe this resolution has the potential to enhance market integrity and reduces information asymmetries, empowering investors to make more informed decisions, thereby stimulating capital flows and driving economic growth. Creating safe harbors for private placements, such as those directed at qualified institutional buyers or accredited investors, is particularly commendable as it would increase certainty among issuers and market participants of important regulatory boundaries. These safe harbors provide issuers with a flexible and efficient framework while ensuring that investors are adequately protected.

We strongly believe that the CNV’s resolution on private placements represents a significant opportunity for the development of Argentina’s capital markets and a significant step forward in the modernization of Argentina’s financial system. Creating a more level playing field for all market participants will foster greater competition, innovation, and long-term economic prosperity. We commend the Commission for its foresight and leadership in undertaking this important initiative.

Private offerings in the U.S. capital markets

Argentina is an important market. U.S. investors hold substantial investments in Argentina including corporate equities. Argentina also is an important sector in global and emerging markets strategies offered by U.S. managers in private funds, registered funds (i.e., mutual funds), and separate accounts.

SIFMA and MFA recognize that having sound parameters underpinning private offerings can be beneficial and the U.S. market reflects that principle. Private placement offerings in the United States are regulated by Regulation D, which includes several rules designed to facilitate non-public offerings of securities to certain sophisticated investors. An issuer relying on Rule 506(b) (17 CFR 230.506(b)) may sell to an unlimited number of accredited investors, but to no more than 35 non-accredited investors.
Accredited investors who are natural persons aregenerally investors with a net worth of $1 million or income of $200,000 (individually) or $300,000 (with spouse or partner) (see 17 CFR 230.501)⁴ . The accredited investor standard can be readily analogized to the qualified investor standard in Argentina. These well-established parameters around private offerings allow significant flexibility for both emerging companies seeking capital and private investors, which are substantial factors contributing to the U.S.’s status as the world’s largest private placement market.

Opinion and proposal

SIFMA and MFA welcomes Argentina’s intentions to promote its capital markets and their contribution to economic growth. However, we also believe that the proposed limit of 35 investors established for invitations to engage in transactions with securities (and no more than 20 who can invest) will run counter to the authorities’ growth aspirations by hindering the ability to foster broader participation and liquidity in the market. The proposed 35-investor limit is simply too low to justify issuers’ entry into a market as broad and diverse as Argentina; sponsors of private funds seeking to enter the Argentinian market will need to invest in compliance and risk management infrastructure, likely engage local personnel to facilitate marketing activities, and develop country-specific marketing materials and disclosures. Many funds also will determine it necessary to create a separate “sleeve” for offering fund interests to Argentinian investors, whether for tax or other purposes, which further adds to the costs of
entering the Argentinian marketplace.

The considerable costs of engaging with Argentinian investors cannot be supported from a cost-benefit analysis if, as proposed, the maximum number of investors the fund could hope to attract is capped at 35. By artificially limiting the total number of investors, the CNV resolution cap would restrict access to investment opportunities and likely stifle market growth and diversity, which is the exact opposite of what we understand to be the goals of the CNV resolution.

As we have seen in the US, a model allowing a larger number of investors has proven resilient and successful in a variety of market cycles. These dynamic markets also have led to the development of new private fund issuers, strategies, and offerings structures that can suit the needs of a wide variety of institutions and sophisticated, high net worth individuals. The diversification of strategies in the US also in many respects are uncorrelated, which mitigates the likelihood that stress in one sector would spill over into the broader economy.

The proliferation of private fund offerings has bolstered the institutional investor segment by facilitating investment by foundations, endowments, and pension funds. Private funds have helped shore-up under-funded pensions, provided for multigenerational growth to provide for the beneficiaries of pensions and endowments, and furthered the important charitable goals of foundations.

Rule 506 has proven tremendously successful in raising investor capital that is used to provide important financing to US businesses that help to contribute to the overall growth of the US economy. We believe this approach has had similar success in neighboring Latin American countries (e.g. Chile, Peru, Mexico, Panama, Uruguay). None of this, we suggest, would have been possible with a hard cap of 35 offerees (or fewer investors) total.

Instead, we would propose that the parameters not include any cap on invitations to or the investment by qualified investors who already must meet strict criteria established by regulators and possess the sophistication necessary (and may receive the advice of financial intermediaries) to responsibly participate in the market for private offerings. This approach would provide clarity to the investment community, in the spirit of harnessing capital formation, whilst also recognizing the importance of protecting the general public. This approach also would reduce compliance costs associated with the initiative — costs that otherwise would ultimately be borne by investors.

While we strongly believe a limit such as that discussed above would be impractical, if the CNV feels it must retain one in some form then we recommend that the number of maximum investors available should be renewed from time to time. For instance, by clarifying that the maximum number of offerees are counted each calendar year, or 12 months as of the first offer, and such maximum number is renewed each year. This would be consistent with other regulations in the region, such as Chile and Panama.

Again, thank you for the opportunity to comment on these important proposals. We would welcome the opportunity to discuss further perhaps via a video conference with SIFMA and MFA’s most active members in the Argentinian market.

Sincerely yours.

Kenneth E. Bentsen, Jr.
President & Chief Executive Officer
Securities Industry & Financial Markets
Association

Lindsey W. Keljo
Head – Asset Management Group
Securities Industry and Financial Markets
Association

Bryan Corbett
President & Chief Executive Officer
MFA

1. SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. SIFMA’s broker-dealer members comprise 80% of U.S. market share by revenues and 70% of financial advisors managing $18 trillion of client assets. On behalf of our industry’s nearly one million employees, we advocate on legislation, regulation, and business policy affecting retail and institutional investors, equity and fixed income markets, and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA AMG, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association. [↩]
2. SIFMA AMG brings the asset management community together to provide views on U.S. and global policy and to create industry best practices. SIFMA AMG’s members represent U.S. and global asset management firms whose combined assets under management exceed $45 trillion. The clients of SIFMA AMG member firms include, among others, tens of millions of individual investors, registered investment companies, endowments, public and private pension funds, UCITS, and private funds such as hedge funds and private equity funds. For more information, visit http://www.sifma.org/amg. [↩]
3. Managed Funds Association (MFA), based in Washington, DC, New York, Brussels, and London, represents the global alternative asset management industry. MFA’s mission is to advance the ability of alternative asset managers to raise capital, invest, and generate returns for their beneficiaries. MFA advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. MFA has more than 180 member fund managers, including traditional hedge funds, credit funds, and crossover funds, that collectively manage over $3.2 trillion across a diverse group of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors to diversify their investments, manage risk, and generate attractive returns over time. [↩]
4. Additional criteria exist for businesses and registered
   securities firms to determine whether they are accredited investors. Rule 504 permits certain issuers to offer and sell up to $10 million of securities in any 12-month period to any number and type of investor without being required to fulfill specific disclosure requirements. See 17 CFR 230.504. [↩]