The recent finalization by the U.S. Securities and Exchange Commission of certain rules necessitated by the 2012 Jumpstart Our Business Startups Act related to private securities offerings creates a new environment in which a variety of small businesses, entrepreneurs and startup companies and private funds can raise capital.
The upshot is that businesses, hedge funds and private equity firms can still avoid costly regulatory registration of their securities by engaging a private offering exemption but can now publicly advertise that activity. Until the commission’s recent action, such public marketing had been expressly prohibited for the past 80 years.
As only a single component of the JOBS Act, and finalized a full 15 months after the law requiring the rules was passed, the new provisions cannot be called the immediate relief the JOBS Act was presumably intended to provide in the spring of 2012. Still, this public advertising feature constitutes a development that could expand the investor universe and possibly lower costs related to capitalization.
Originally published in Missouri Lawyers Weekly on July 29th, 2013.
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Topics: Advertising, Dodd-Frank, Entrepreneurs, General Solicitation, JOBS Act, New Legislation, Private Funds, Private Placements, Registration, Rule 506 Offerings, SEC, Securities Act of 1933, Small Business, Startups
Published In: Business Organization Updates, General Business Updates, Finance & Banking Updates, Securities Updates
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