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US companies turning to private funding

Reuters reports that US companies are turning to private funding by taking advantage of securities rules that allow them to raise capital without costly registrations. Reg D rule 506 permits companies to raise unlimited capital through unregistered offerings provided the offerings come from particular sophisticated investors.

According to the SEC, in 2010 these private findings exceeded debt funding and have done so in Q1 2011 also. The article cites Eurozone sovereign debt crisis and slow US recovery as reasons behind this.