What Are They Thinking?

Yesterday, the Securities and Exchange Commission issued proposed rules to, among other things,  permit general advertising for private placements (Reg. D offerings) provided that the issuer takes reasonable steps to verify that all purchasers are “accredited investors” as defined by Rule 501(a) of Regulation D.

The new SEC proposed rules give a clue as to its possible crowd funding position where it says in the introduction to the proposed rules that “an issuer that solicits new investors through a [public] website…email or social media would likely be obligated to take greater measures to verify accredited investor status than an issuer that solicits new investors from a database of pre-screened accredited investors… maintained by… a broker dealer.”

So, this suggests that the Commission may allow issuers in crowd funded deals to rely on funding portals’ vetting of investors to ensure that the investors do not, for example, exceed their statutory personal investment limitations.

About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at: http://www.linkedin.com/pub/jeffrey-a-koeppel/0/63/5a9
This entry was posted in Broker dealers, Crowd Fund Act, Crowd Fund Act of 2012, Crowd Funding At the Margins, Crowd Funding Platforms, FINRA, Funding Portals, Investments, SEC, Wall Street and tagged , , , , , , , , , , , , , , , , . Bookmark the permalink.

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