As required by the JOBS Act, the U.S. Securities and Exchange Commission has proposed rules to eliminate the prohibition on general solicitation and general advertising in private placements exempt from registration by Rule 506 under the Securities Act of 1933, as long as all purchasers of the securities are accredited investors. The elimination of the prohibition on general solicitation and general advertising will result in issuers being able to attract a wider variety of investors with less cost. Increased competition for quality investments could also improve terms for issuers, reducing their cost of capital.
The firm’s client alert regarding the SEC’s proposal may be accessed here.
After years of (perhaps excessive) regulation aimed at promoting transparency and accountability, the JOBS Act, signed by the President and overwhelmingly passed by Congress, undoes many of these requirements for companies that have the least experience in providing appropriate information upon which an investor can base its investment decision. It may also open the gateway for investors who arguably aren’t armed with the financial knowledge to protect themselves – they may just put it all on red and let it ride.
Continue reading Give Us Your Tired, Your Poor, Your Companies Seeking Capital… The JOBS Act: A New Path to Prosperity or an Opening for Securities Fraud?
As a follow-up to our post of February 7th regarding increased stockholder interest in the disclosure by public companies of their political expenditures and activities, we note that in a speech to securities law practitioners on February 24, 2012, SEC Commissioner Luis A. Aguilar called for the SEC to adopt rules requiring public companies to provide uniform and consistent disclosure of their corporate political expenditures. “Requiring transparency for corporate political expenditures cannot wait,” Commissioner Aguilar stated, citing the SEC’s responsibility to “ensure that investors are not left in the dark while their money is used without their knowledge or consent.”
Continue reading SEC Commissioners Comment on Political Expense Disclosure