SEC Officially Joins the 21st Century
Congratulations to the SEC on joining us in the technologically social and progressive 21st century!
July saw the overturn of an 80 year ban on soliciting private investments to the general public. Title II of Obama's 2012 JOBS Act has been revamped to further boost how small businesses, entrepreneurs and startup companies and private funds can raise capital. The change to the Securities and Exchange Commission's 80 year regulation on mass marketing not only generates public support, it opens up a whole new form of accessible reach to the U.S.'s estimated 8.7 million accredited investors. As of Monday, September 23rd, tweets, Facebook ads, press mentions or even a spot on the back of a Wheaties box will all be fair playing ground in fostering awareness of private securities.
The lift on the ban also paves the way for a second phase to take place. Rooted in crowdfunded finance, platforms like Kickstarter will ultimately be able to sell shares of open source companies and small equities to non-accredited investors. The ability for those in need of fundraising to solicit their ideas over a variety of social outlets will not only create a viable way to connect with accredited investors, it will allow their projects and products to be socially endorsed and ultimately leverage even more capital growth.
The elimination of the marketing ban perhaps lightened the workload for the SEC as advertised securities will no longer have to go through the time consuming and costly process of being registered. While a set of new and even more strict issuer disclosure and investor safeguards have been proposed by the SEC, they will not be implemented at this point. This is an exciting and experimental time for the PE sector and will be a true test in its ability to uphold standards and capital market integrity.
By Carly Sewell