Meetup Thoughts Regarding Proposed Reg D and Form D Rules
At a meetup yesterday, someone asked me to comment on the proposed SEC rules regarding Reg D and Form D. Here is what I jotted down on the spot as comments someone could submit to the SEC:
(1) The spirit of the JOBS Act was to make it easier for startups to raise money.
(2) Your proposed rules will make it much, much harder for startups to raise money.
(3) Your proposed rules create a lot of traps for the unwary. Many startups will inadvertently violate these rules and then be disqualified from raising money for a year. This will actually hurt the economy.
(4) The SEC has not done a good job of defining what actually constitutes general solicitation and general advertising, yet proposes to automatically disqualify companies from using Rule 506 for a year if they don’t file an Advance Form D 15 days before generally soliciting. This is totally unfair to companies.
(5) Demo days and investment forums and similar events are good for America. I think the point of the JOBS Act was to countenance these events. But your proposed rules would essentially make them illegal because many founders of startups will miss the Advance Form D filing inadvertently. This result is directly contrary to the spirit of the JOBS Act.
(6) You are asking startups (many of which have very limited financial resources) to spend thousands of dollars filling out forms before they have raised any money. This is unfair. Many startups that go out and try to raise money never succeed in doing so. This is another reason the post-sale Form D makes more sense than a pre-filing.
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, Public Policy
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, general solicitation
, Reg D
, Reg D securities offerings
, Regulation D
, Rule 506(b)
, Rule 506(c)
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