New SEC Rules Allow for General Solicitation - What You Need to Know Before You Raise Capital

Location: BrownWinick, 666 Grand Avenue, Suite 2000, Des Moines, Iowa


SEC Adopts New Regulations Which Improve Access to Capital Markets

On July 10th, the SEC adopted final regulations to implement a much anticipated provision of the 2012 JOBS Act.  The JOBS Act, passed in April 2012, directed the SEC to allow general solicitation and general advertising in certain unregistered securities offerings where all investors are accredited under SEC regulations.  Allowing general solicitation and general advertising in these circumstances will have a profound impact on the ways companies raise capital and will provide access to investors which were previously unavailable to these entrepreneurs.

The longstanding prohibition against general solicitation and general advertising in unregistered securities offerings has created difficulties in modern times when so much communication takes place through the internet and social media.  Congress determined that the competing interests of investor protection versus increasing entrepreneurs’ access to capital through modern forms of communication could be appropriately balanced by the SEC.  If entrepreneurs wish to utilize this new flexibility, the SEC has required them to take additional steps to determine whether investors are accredited.

These new regulations become effective in approximately 60 days and add an additional option for those raising capital.  Companies can continue to use the securities registration exemptions that were available prior to the new regulations.  If you are planning to raise capital in the near future or you are in the process of raising capital, we would be happy to discuss the impact that these new regulations will have on your offering.  There is a great deal of misunderstanding and confusion regarding the new regulations.

BrownWinick held a webinar/seminar on Thursday, August 8th to discuss their impact and to help you to understand them. CLICK here for the recorded webinar. CLICK here for the materials.