Before 2013, issuers were prohibited from using any means of general solicitation or advertising when raising capital in the private markets. The prohibition was perceived by many to be the single biggest impediment to raising capital privately, particularly since it foreclosed the use of perhaps the greatest capital raising tool ever created: the Internet.
That all changed in 2013 when the Securities and Exchange Commission created new Rule 506(c) under the JOBS Act of 2012, which allowed companies for the first time ever to seek investors through general solicitation and advertising without registering with the SEC, so long as they sold only to accredited investors and used reasonable methods to verify accredited investor status.
So what are reasonable methods of verification? It clearly involves something more than what would meet the “reasonable belief” standard for determining accredited investor status for purposes of the 35 non-accredited investor cap for Rule 506(b) offerings, which as a practical matter means self-attestation through an investor questionnaire. That would not fly under Rule 506(c)’s reasonable verification method standard.Continue Reading (Minimum Investment) Size Matters, When it Comes to Rule 506(c) Verification
Ripple Labs, Inc. and two of its executives alleging they offered and sold over $1.38 billion of digital asset XRP without registration or exemption in violation of Section 5 of the Securities Act of 1933, seeking disgorgement of ill-gotten gains. Ripple filed an
the rules governing exempt offerings (the “2020 Reforms”) to make it easier for issuers to move from one exemption to another, to bring clarity and consistency to the rules governing offering communications, to increase offering and investment limits and to harmonize certain disclosure requirements
harmonize and improve the exempt offering framework to facilitate capital formation and investment opportunities in startups and emerging companies. The rule amendments were initially 
investor” to include additional entities that could bear the economic risks of investment and certain financially sophisticated persons irrespective of income or wealth. The Commission’s main objective is to identify more effectively institutional and individual investors that have the knowledge and expertise
major reasons, one of which has little or nothing to do with money. The first reason is that new securities offering legislation enacted in 2012 creates new legal capital raising pathways which allow developers for the first time to use the
street as “JOBS Act 3.0”, which is the latest iteration of the effort