Monday, September 23, 2013

SEC Lifts Ban on General Solicitation to Turbo-Charge JOBS Act

Today the SEC lifted its ban on general solicitation.  This is good news for startups who want to raise money under the JOBS Act if they can adhere to all of the required disclosures.  Companies must now submit very detailed documentation of their fundraising to the SEC if they want to remain compliant.  This is good news for securities attorneys and compliance consultants who will now be fully employed by startups requiring their services.

I tuned in to today's webinars from SeedInvest and Crowdfunder.  The new implications of Reg D are massive.  Investors need to know that merely claiming to have accredited status won't be sufficient to stay out of trouble.  They need to document their income and net worth if they want to play with startups under the JOBS Act.  Accredited investors could also have a third party (CPA, RIA, etc.) document their status.  I'm still not clear on whether public events such as product demo launches, angel pitchfests, accelerator or incubator workshops, and business plan competitions will require presenting companies to file disclosures prior to appearing.  I also wonder whether the SEC will pay a bounty for turning in "bad actors" who continue to abuse securities regulations. I would like to see these matters clarified on the SEC's JOBS Act page.

I am not at present an SEC-defined accredited investor, so I must of course adhere to SEC rules, FINRA rules, and crowdfunding portal rules to stay on the right side of the law.  I have always had a clean record and I am going to keep it that way.  BTW, this blog article does not in any way constitute legal or financial advice.  Startups seeking legal counsel on raising capital need to talk to one of the overworked securities attorneys I've seen around Silicon Valley.