Citizen.VC, a online investment platform that leverages 506(b) Reg D private placements but NOT 506(c) placements, has received a “No Action” letter from the SEC regarding questions and clarifications as to what qualifies as general solicitation and the establishment of relations with investors. The guidance provided by the SEC appears to clarify some of the touchier issues regarding the realities of the internet.
Under 506(b) issuers are not allowed to solicit investors (advertise) but with all investment platforms moving online – it is pretty hard to hide from inquiring eyes.
The No Action letter validates Citizen.VC’s policies and procedures in creating a “substantive, pre-existing relationship”. Title II of the JOBS Act legalized general solicitation in acquiring accredited investors but since Citizen.VC is using old Reg D that want to be certain not to run afoul of the regulators.
The request for clarification, and response from the SEC, are embedded below.
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