Title II of the Jumpstart Our Business Startups Act directs the SEC to lift the ban on general solicitation and advertising under Rule 506 of Regulation D. That rule creates a safe harbor that deems the covered transactions to not involve any public offering within the meaning of section 4(2) of the Securities Act. However, … Read more »
Category: Fundraising
Crowdfunding the Crowdfunders
With President Obama set to sign the Jumpstart Our Business Startups Act on Thursday, it seems the race is on to create a crowdfunding portal and to start making money. Crowdfunding has been around for a long time and the use of a crowdfunding portal dates back several years. Now there is a crowdfunding accreditation … Read more »
Steps to Determine if an Investor is Accredited
Private funds will be able to advertise and solicit for investor, provided all of the investors are “accredited investors.” The Jumpstart Our Business Startups Act will dramatically change the way capital raising for private funds operates. The drawback is the loss of 35 non-accredited investors in the fund. That exception has been eliminated. Funds will … Read more »
Next Steps for the JOBS Act
The Jumpstart Our Business Startups Act, as amended by the Senate, was voted on by the House of Representatives yesterday and passed 380 to 41. That makes it a very bi-partisan bill, even though all 41 “Nays” were Democrats. If I remember my Schoolhouse Rocks song correctly, it’s up to the President to sign it … Read more »
Lifting the Ban on General Solicitation and General Advertising
On Thursday afternoon, the US Senate passed the Jumpstart Our Business Startups Act, a bill designed to make it easier for small companies to raise capital. The centerpiece of the legislation is the crowdfunding provision. However, the Senate passed an amendment to that section of the legislation. That means the Senate version and the House … Read more »
How Do State Regulators Really Feel About the JOBS Act?
The House of Representatives recently voted to pass The Jumpstart Our Business Startups (JOBS) Act (H.R. 3606), a collection of several bills focused on barriers to capital formation. I’m focused on the bill because of mostly because of the Access to Capital for Job Creators section that would override the ban on general solicitation and … Read more »
Crowdsourcing the Crowdfunding Exemption
There is a growing movement to create a new crowdfunding regime for raising capital. The models seem to draw inspiration from Kickstarter, a platform to fund creative projects. I say that because each time I see a draft bill it talks about an internet-based intermediary as part of the exemption. President Obama endorsed the idea … Read more »
New York City “Pay-to-Play” Law is Upheld
The U.S. Court of Appeals for the Second Circuit upheld a New York City “pay-to-play” law against various constitutional challenges: Ognibene v. Parkes. The Pay to play law is in Local Law 34 and it: Lowers the caps applicable to campaign contributions from parties that have “business dealings” with New York City to $400 (otherwise … Read more »
Amending the Ban on General Solicitation and Advertising
There seems to be some momentum for changes to the Regulation D’s prohibition on advertising a private fund offering. The Managed Funds Association has asked the SEC to start a rulemaking and one of the SEC’s new advisory committees has also recommended a change. The SEC’s new Advisory Committee on Small and Emerging Companies approved … Read more »
The New Accredited Investor Standard
After thinking about it for almost year, the Securities and Exchange Commission has finalized the new definition of “accredited investor.” On January 25, 2011, the SEC proposed amendments to the accredited investor standards in the rules under the Securities Act of 1933 to implement the requirements of Section 413(a) of the Dodd-Frank Wall Street Reform … Read more »