Today, the SEC voted 4 to 1 in favor of implementing section 201(a) of the JOBS Act which lifts the ban on general solicitation, permitting startups, venture capitalists and hedge funds to openly advertise that they are raising money. This limitation has been in place for over 80 years and the rulemaking to lift the ban has been delayed since April 2012. when President Obama signed the Act. Note that the SEC still has not ruled on the Crowdfunding provisions of the Act.
So what does this mean for your company?
You may begin to widen the scope of your efforts to raise money, but investment is still limited to accredited investors with more that $1 million liquid net worth, and the companies or fundraisers must take reasonable steps to ensure the investors are in fact accredited. To help the SEC collect data, fundraisers have to file a Form D with the SEC at least 15 days BEFORE they begin to generally solicit investors in an offering, and amend the Form D within 30 days of the offering close.
The reasonable steps necessary are not clearly defined and will need to be considered in each fundraising situation, so be sure to contact a securities attorney prior to posting your offering billboards.
Author: Jennifer Trowbridge, Stoecklein Law Group, LLP
* Photo credit: www.startupblog.com