The SEC commissioners have voted to issue the adopting release lifting the ban on general solicitation for private placements by a vote of 4-1.
The SEC will move to create a new class of offering, called a 506(c) offering, which allows general solicitation (advertising) while disallowing any and all participation by non-accredited investors.
“Although there are a few more strings attached to using general solicitation with Reg D 506 (c), it has the potential to fundamentally change our business,” Realty Mogul CEO Jilliene Helman told Crowdfund Insider. “For the first time in decades we can openly share and market investments as they are being funded.”
The SEC’s work on this front doesn’t stop at implementation. The Commission will monitor the effect of general solicitation and weigh effects against their dual mandate of fostering capital formation and protecting investors. This effort will involve multiple departments across the SEC.
The Commission has also adopted two other measures, one of which prevents bad actors from participating in private placement offerings. The final measure consisted of a host of changes aimed at helping the SEC monitor the private placement marketplace, including…
- Expanding the information issuers must include on Form D
- Requiring a Form D filing at least 15 days before general solicitation begins
- Requiring a Form D filing when an offering is completed
EDIT: Brian Knight of CrowdCheck has clarified for Crowdfund Insider that the Form D requirement proposal is just that – a proposal – and the rule has not been finalized as of yet.
Today is three months to the day that Mary Jo White was instated as Chairman of the SEC.
Dissent was voiced by Commissioner Luis A. Aguilar regarding the removal of a ban on general solicitation. Commissioners Troy Paredes and Daniel Gallagher voiced objections to the third measure, arguing additional regulatory hurdles would place undue burden on the capital formation process.