Stemming from the 2012 Jumpstart our Business Startups (JOBS) Act, SEC regulations take effect today. However, it appears work still needs to be done. At the Angel Capital Association Summit in Philadelphia last week, I talked to investors about a bill moving swiftly through Congress to remove an unintended consequence of today’s new rules.
The “unintended consequence” came from SEC Regulation D 506(c), which allows private issuers to use general solicitation when raising capital as long as they take reasonable steps to verify that the investors who purchase their securities are “accredited investors” – a category of individuals deemed sophisticated enough under securities laws to need less protection in the marketplace.
