07 Aug Ban on General Solicitation in Private Offerings Ends September 23, 2013

It’s official. The new SEC rules ending the ban on advertising and general solicitation in Regulation D private securities offerings to accredited investors were published in the US Federal Register on July 24. They are effective 60 days later, or September 23, 2013. After that companies and their advisors will have the full ability when offering their stock privately to advertise or promote online or through mass emails. There will be filings to do and rules to follow and you will be able to sell only to accrediteds.

But this really is a dramatic change in the arsenal available especially to smaller companies and investment banks to reach a much broader audience. We are already seeing a cottage industry of data suppliers, accredited status confirming companies and the like emerging. Whoever has the biggest list of emails of accrediteds wins!  And with the contemporaneous banning of “bad actors” from these offerings, the likelihood of fraud in advertised offerings goes down quite a bit.

Thanks Congress for the Jumpstart Our Business Startups Act, and thanks SEC for writing balanced and cohesive rules on this.