Full Text of Dodd Bill

You can find the full text of the Dodd bill here.

Sections 412 and 926 are relevant to the startup community and in general largely preserve the existing legal framework:

  • Federal preemption of state regulation of all accredited investor offerings remains the rule;
  • No 120 day wait period for a filing with the SEC will be required (as originally proposed in the Dodd bill); 
  • The SEC is being instructed to adjust the net worth standard for an accredited investor to exclude the value of primary residences; and
  • In Section 926, the SEC is being instructed to issue rules for the disqualification of offerings and sales of securities under Rule 506 that “bad actors” are involved in.

About Joe Wallin

Joe Wallin focuses on emerging, high growth, and startup companies. Joe frequently represents companies in angel and venture financings, mergers and acquisitions, and other significant business transactions. Joe also represents investors in U.S. businesses, and provides general counsel services for companies from startup to post-public.
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  • http://www.wac6.com William Carleton

    Joe, as usual, you cut right to the core and clarify things. I think everyone at the end there was focusing so much on the angel investment implications, the equally critical 926 provisions got short shrift or lost.

  • http://www.myercorplaw.com/ John A. Myer

    I agree with Bill that the implementation and eventual enforcement of Section 926 is going to be interesting and problematic in some aspects. In principle, it is a great idea to disqualify offerings by persons convicted of fraud or otherwise banned from securities transactions. But they won’t be making the offering. Rather, a company that they have no apparent ties to will be doing so. How on earth will the SEC spot the issuers contaminated with such an association?
    Joe, thanks for gleaning valuable information from the proposed legislation and presenting it clearly and concisely.