SEC Allows General Solicitation, Effective Today: What Changed And What To Watch Out For


Today, the U.S. Securities Exchange Commission’s final rules allowing general solicitation went into effect. In the fundraising context, general solicitation means publicly advertising the fact that you’re raising money. Previously, this was a big no-no.

The Way it Was

The most important securities regulations for startups is Regulation D, or Reg D. In a nutshell, Reg D provides exemptions from the general rule that all securities have to be registered with the SEC. Registration is a complex and expensive process that would in itself sink many small companies, so Reg D is a big deal. Blowing Reg D exemptions keeps securities lawyers up at night.

The most useful of the exemptions Reg D provides is Rule 506, which doesn’t have a dollar-amount cap. However, Rule 506 has two catches. First, companies can only raise funds from an unlimited number of accredited investors plus up to 35 non-accredited investors. For individuals, an accredited investor is…

View original post 408 more words


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s