The Securities and Exchange Commission
(SEC) adopted a new rules today implementing Title II of the JOBS Act. In
essence, these new rules lift the ban on general solicitation or general
advertising for certain private securities offerings for business startups,
while also adopting rules to discourage fraudsters from touting the investments
and to add new protections for investors.
The new rules become effective 60 days
after publication in the Federal Register. During this 60 day period the rules
will be subject to public comment.
Ordinarily, the offer and sale of securities require registration with the SEC. A number of exemptions from registration exist but most of these exemptions prohibited general solicitation advertising. Rule 506 of Regulation D for example allowed a company (issuer) to raise an unlimited amount of capital from an unlimited number of “accredited investors” and up to 35 non-accredited investors. [1]
