| JOBS Act Investor Solicitation Rules Goes Into Effect Today

Posted in Business Financing, Start-up Ventures at 9:00 AM by Loftis Consulting

Finally, the day has arrived.  Today companies can advertise private placements to the general public using general advertising methods including social media; however, the private placements can only be sold to accredited investors.  Notice that I said accredited investors not just plain ordinary investors and this is a different funding source than through crowd funding which has a different set of rules.  Accredited investors are believed to be more investment savvy and thus have less rules but it is up to you, the seller, to verify that your buyer of the private placement meets this definition.  According to the SEC here are your options to do just that:

  • On the basis of net income by reviewing tax returns or through a statement from the investor that he or she expect to hit the SEC income requirements
  • On the basis of net worth by reviewing the investors personal financial statements showing assets and liabilities
  • Third-party written confirmations such as a registered broker-dealer, SEC-registered financial advisor, licensed attorney or CPA

Good luck.

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