Accredited investors beware...the SEC will now allow the evil marketplace and market forces to decide which companies get private investor money or not. For 80 years our government had prohibited “general solicitation” i.e., the communication of a private investment opportunity to an accredited investor without an “existing business relationship.”
Yes Virginia... The SEC has finally (1.5 years AFTER the change was mandated by the JOBS Act of 2012) amended Regulation D (“Reg D”) of Rule 506 of the Securities Act of 1933. Rule 506 is the primary exception to the requirement for a full SEC registration of securities offering (the process that is of course VERY time consuming, highly onerous and massively expensive for early stage companies to fulfill). The 506 exemption has allowed private placement memorandums that companies could use to privately solicit investments from accredited investors (individuals with $1 million net worth not including their residence, or $200K a year in individual income) where there was a “pre-existing business relationship.”
