SEC Approves JOBS Act (Jumpstart Our Business Startups Act) Requirement to Lift General Solicitation Ban,
July 10, 2012 - A major step in the JOBS act has been taken by the SEC in lifting the ban on general solicitation on general advertising for certain private securities offerings. This means that under certain circumstances, a company raising money can reach out to many individuals and actually advertise that they are raising capital.
The SEC adopted section 201(a) of JOBS Act, which overturns 80-year-old rules banning the general solicitation on private offerings by companies. And while that means companies are now allowed to use advertising to raise unlimited amounts of capital the accredited investor stipulation remains in place.
Accredited Investors, under rule 506/Regulation D, are investors with over $1 million in investable assets or $200,000 in annual income for the previous two years ($300,000 for joint income) are considered "sophisticated" and eligible for accreditation.
The two options that private placement issuers have to verify whether an investor is “accredited” is to either review federal-tax documents to check an investor’s income or have a registered broker, investment adviser, licensed attorney or CPA confirm clients’ income and overall net worth.
The SEC also adopted rules that disqualify felons and other bad actors from participating in certain securities offerings as required by the Dodd-Frank Act.
See the links below for more information.
SEC Approves JOBS Act Requirement to Lift General Solicitation Ban
SEC website http://www.sec.gov/news/press/2013/2013-124.htm
SEC Lifts Solicitation Ban for JOBS Act Investments
Washington, D.C. (July 10, 2013) BY Michael Cohn
SEC JOBS Act Rule: Be Ready For Headaches, And Opportunities
Startups May Love The SEC's Move to End Ad Ban, But Advisors Should be Cautious
Jul. 10, 2013 Megan Leonhardt