On July 10, 2013, the Securities and Exchange Commission (SEC) promulgated long-awaited rules which will allow and govern how business owners and entrepreneurs may use media and advertising to reach potential investors. The rules implement a requirement in the 2012 JOBS Act to lift the ban on “general solicitation” under current Rule 506 of Regulation D, the most frequently utilized framework in qualifying a securities offering as exempt from registration with the SEC. In essence, those offering securities would be permitted under federal law to use internet communications, aggregation sites, and general advertisements to solicit investments so long as the actual purchaser of the securities is an "accredited investor" (see further information below) and the offer or undertakes reasonable measures to verify that purchasers qualify as accredited investors. The rules are subject to a 60-day comment period, and the earliest such will become effective is September 2013.
The background on the significant, company-friendly change of law, and the features of the proposed SEC release, are as follows...
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