SEC Approves JOBS Act Requirement To Lift Ban On Private Securities Advertising

Eliane Chavagnon Americas Correspondent 11 July 2013

SEC Approves JOBS Act Requirement To Lift Ban On Private Securities Advertising

The Securities and Exchange Commission has adopted a new rule to implement a JOBS Act requirement which involves lifting the ban on general solicitation or general advertising for certain private securities offerings.

The US authority said yesterday that the Commission voted to issue a rule proposal requiring issuers to provide additional information about private securities offerings to better enable it to monitor the market. The proposal also provides for additional safeguards as this market changes and new practices develop.

Abolishing the ban was required under the 2012 Jumpstart Our Business Startups Act, established to help startups and small business with regard to financing regulations.

While many welcome the move, critics argue that lifting the ban will expose small and/or inexperienced investors to fraud as a result of loosened investment protections. In response, the SEC has adopted rules that disqualify felons and other “bad actors” from participating in certain securities offerings as required by the Dodd-Frank Act.

The rule amendments become effective 60 days after publication in the Federal Register. The rule proposal will undergo a 60-day public comment period following its publication.

April Rudin, chief executive and founder at The Rudin Group, this week spoke to Family Wealth Report about how she believes that lifting the ban will serve to “flatten the playing field” for smaller emerging funds, as larger funds typically sell on track record and return (view here).


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