The JOBS Act: Congress Overhauls Laws Governing Capital Raising for Most Issuers and Reporting for New Public Companies


On March 27, 2012, Congress passed the Jumpstart Our Business Startups Act (the JOBS Act), which President Obama has said he will sign into law. The JOBS Act includes significant reforms intended to facilitate capital raising by small businesses and has profound ramifications for private companies, broker-dealers (including underwriters, placement agents and research analysts), private investment funds (including hedge funds, venture capital funds and private equity funds), the ongoing activities of existing public companies, and "emerging growth companies," a newly created category. It represents the most comprehensive reform to the laws governing capital raising since the Securities and Exchange Commission (SEC) issued its 2005 Securities Offering Reform.

Elimination of the Ban on General Solicitation and Advertising

The JOBS Act significantly expands the options issuers (including both operating companies and investment funds) have to raise capital without registering their securities under the Securities Act of 1933 (the Securities Act). Such issuers can now engage in general solicitation and make use of general advertisements when selling to accredited investors under Regulation D, so long as they take "reasonable steps" to ensure that all purchasers are accredited investors. They can also engage in general solicitation and make use of general advertisements when selling to qualified institutional buyers under Rule 144A, so long as they take reasonable steps to ensure that all purchasers are qualified institutional buyers. This fundamental change in law means that a private operating company or investment fund can use print, broadcast or outdoor advertisements, Internet advertisements, websites without password protection and other forms of communication to market Regulation D offerings, so long as all investors who actually purchase securities in the offering are accredited investors.

Please see full bulletin below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Katten Muchin Rosenman LLP | Attorney Advertising

Written by:


Katten Muchin Rosenman LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.