#rule 506

[jdsupra]

Hey Startups: In 3 Days You Can Advertise Securities Offerings – Are You Ready?

On Monday, September 23, the Securities and Exchange Commission ban on public advertising of private securities offerings draws to an end, opening the door for companies to publicly solicit investors for the first time since the Securities Act of 1933 was enacted.

Plan to advertise your offering? Here’s your weekend reading:

The SEC’s Proposed Rule Changes Under The JOBS Act

Reminders for Issuers That Intend to Use General Solicitation

Public advertising in ‘private’ Regulation D offerings

How To Use Electronic Media To Access Accredited Investors Under The New SEC Rules

Amended Rule 506 - Lifting the Ban on General Solicitation

Dawn of a Brave New World! Advertising in "private offerings" under new SEC Rule 506(c), but no "bad actors"

Immediate Action Item for Private Funds and Their Managers: Prepare and Distribute "Bad Actor" Questionnaires

The Guide to Social Media and the Securities Laws

JOBS Act Rules – Limited Grandfathering For Current Investors; Certain Other Form D Developments

SEC Lifts Ban on General Solicitation for Certain Private Offerings

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Read more on Rule 506 Offerings at JD Supra Law News>>

[dsprse]

Want to raise "unlimited capital"? It's all about Rule 506 exemptions, bro!

First, hurray to SEC Chairwoman Mary Jo White!  Whether you're an entrepreneur doing a raise or a hedge fund launching a new fund, you can now advertise to the public thanks to her.  No more skulking around networking events and dancing for "the man" on stage at investor pitches.

The great news is that fundraisers are going to need advice like the sort Disperse provides.  The bad news is that fundraisers are going to end up doing business with "investors" who they shouldn't be doing business with.  As usual, the opportunity being greater than the risks, you're going to do or come across a lot of marketing that asks for money.  If you thought Kickstarter was a wild west, just wait and see.

But first, consider what the SEC means by advertising (PDF):

"Although the terms “general solicitation” and “general advertising” are not defined in Regulation D, Rule 502(c) does provide examples of general solicitation and general advertising, including advertisements published in newspapers and magazines, communications broadcast over television and radio, and seminars where attendees have been invited by general solicitation or general advertising.  By interpretation, the Commission has confirmed that other uses of publicly available media, such as unrestricted websites, also constitute general solicitation and general advertising.  In this release, we refer to both general solicitation and general advertising as “general solicitation.”

No mention of social media specifically, of course. But, regardless of what your lawyer says, you can invite prospective attendees to seminars via Facebook invites, you can link your solicitation from a newspaper or magazine via your LinkedIn company page, you can upload your TV or radio ad on YouTube, and you can link to your "unrestricted website" from your Twitter profile, all without necessarily using verbage from the actual solicitation. 

This is a new frontier in fundraising so don't go it alone.  Contact your SEC-connected lawyer to explain the rule changes to you.  Then contact Disperse to help you take advantage of it.