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Accredited Investor Verification

When Congress imposed a lifting of the ban on advertisements for private placements, it also imposed a mandate that the fundraiser “take reasonable steps to verify that purchasers of the securities are accredited investors.” The methods for verification were to be determined by the Securities and Exchange Commission. The SEC, to its credit, did not […]

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Filing Form D and General Solicitation

One of the current issues around a fund manager or company from using advertising as part of its private placement fundraising is the proposed changes to filing requirements for Form D. Few people I have spoken with actually want to use general solicitation like bulk emails, newspaper ads, or web ads. But they do want […]

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How Not to Use Twitter as a Fund Manager

The Securities and Exchange Commission charged Mark A. Grimaldi and his firm, Navigator Money Management, with making false claims through Twitter, newsletters, and other communications about the success of their investment advice and a mutual fund they manage. Grimaldi and Navigator were using social media and widely disseminated newsletters to cherry-pick information and make misleading claims […]

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The Proposed New Regulation A for Fundraising

Title IV of the Jumpstart Our Business Startup (JOBS) Act mandated changes to the moribund Regulation A offering process. That law raised the bar from $5 million to $50 million and prodded the SEC into making changes. The SEC issued the proposed rule with enough interesting treats that it may be worth exploring. The SEC […]

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Participating Bad Actors and Private Funds

The SEC staff issued new Compliance & Disclosure Interpretations relating to Rule 506(d), the new bad actor rule. Under the rule, an issuer may not rely on the Rule 506 exemption if the issuer or any other person covered by rule has a relevant disqualifying event that occurred on or after September 23, 2013 (the […]

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The Upcoming Changes to the Accredited Investor Standard

Section 413 of the Dodd-Frank Act requires the Securities and Exchange Commission to review the accredited investor definition by July 21, 2014, the fourth anniversary of President Obama’s signing of the  law. In a letter to Congressman Scott Garrett, SEC Chair Mary Jo White said that the Commission staff has begun a comprehensive review of the accredited […]

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Is Your Fund Name Misleading?

Last week, the SEC’s Division of Investment Management released a guidance update that focuses on funds that use a name that “suggests safety or protection from loss.” The IM Guidance Update is a shot across the bow, warning a fund to considering changing its name if it exposes investors to “market, credit, or other risks.” […]

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You Got Questions About 506(c) – The SEC Has Answers

The new Rule 506(c) is a big substantive change on how private placements can be run. That leaves many, including me, with a lot of questions. The Securities and Exchange Commission just posted a series of new questions and answers on the new rule. Most of the answers are expected confirmations, but there are a […]

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The Confusing Analysis of Whether You Are An Accredited Investor

There are few commentators who think the current definition of “accredited investor” is a particularly good definition for individuals who should be investing in private placements of securities. Basing the standard on income and net worth does give you a perspective that the person could withstand the potential loss of investment. The definition has become […]

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Voluntarily Submit Your Private Placement Advertisements to the SEC

In a head-scratching move, the Securities and Exchange Commission has created a portal for you to voluntarily submit general solicitation materials for private placements. With Rule 506(c) now in effect, companies are free to advertise their private placements of securities, so long as the company takes reasonable steps to ensure that investors are accredited investors. […]

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