U.S. securities regulators are in the early stages of reviewing rules governing share issuances by private companies, Securities and Exchange Commission Chairman Mary Schapiro said on Friday.

Many of the rules we have in place governing the offering process are decades old, she told an audience of business journalists in Dallas. It makes sense for us ... to take a look at whether our rules have kept pace with changing market dynamics.

The issue has jumped into the spotlight recently as Wall Street banks and electronic markets offer investors a chance to buy and actively trade stakes in hot Internet companies such as Facebook and Twitter before they go public.

The most high-profile example has been Goldman Sachs, which had planned to offer both U.S. and foreign investors a chance to own shares in Facebook through private placements. Goldman Sachs, later in January, opted to limit the offering to foreign investors, citing intense media coverage of the deal.

Mary Schapiro has said several times in the past few months that the SEC is looking at a number of rules, including one that requires a privately held company to register with the agency and file financial statements if a company's private shares are held by 500 or more holders of record.

Companies such as Facebook have avoided that requirement by having Wall Street banks create special investment vehicles in which a number of investors can count as one record holder.

Other rules being eyed apply to private placements and what constitutes a general solicitation for an investment.

An easing of the SEC's rules could result in privately traded companies being able to stay private longer without running afoul of securities laws.

That would be a welcome development for companies wanting to access capital markets without disclosing certain financial information and being more beholden to shareholders.

However, it could shut out a host of investors who would not qualify for private placement share offerings.

Schapiro did not indicate on Friday how the rules might change as a result of the SEC review.

We're in the very early stages of looking at all these rules and provisions and I really can't predict what, if any, change will come out of that, she said. We are approaching it with an open mind.

Schapiro also said she was concerned about the effect that a government shutdown would have on the SEC's operations. The White House and the U.S. Congress have until midnight on Friday to strike a deal on the fiscal 2011 budget or face a partial shutdown of the U.S. government.

(Reporting by Chris Baltimore and Sarah N. Lynch; editing by Gerald E. McCormick and Tim Dobbyn)

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