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Comments on Proposed Rule by SEC

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Comments on Proposed Rule by SEC

By Startup Valley (444 words)
Posted in Equity Crowdfunding on August 29, 2013

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Comments on Proposed Rule: Amendments to Regulation D, Form D and Rule 156 under the Securities Act.

On July 10th, 2013 the SEC adopted rules pertaining to the JOBS Act signed by President Obama on April 5th, 2012. The United States Securities & Exchange Commission adopted rules that would lift the ban on general solicitation and public advertising for private deal offerings, as well as “bad actor” rules eliminating felon participation in private deal offerings. Also on July 10th, the SEC proposed rules changes to Regulation D, Form D and Rule 156 under the Securities Act. This means more disclosures required by issuers participating in any Rule 506 offerings.

The proposed rules are set to become effective September 23rd, 2013. Before then, the SEC allows for a comment period for anyone to write-in and state their comments on the proposed rules. StartupValley, as well as the entire equity crowdfunding industry, feels strongly about many of these proposed rules and are concerned that they will put quite a burden on the startup community, which in-turn goes against what the JOBS Act was written and intended for.

StartupValley’s recommendations:

  • Remove the Form D filing 15 days prior to start of the financial raise entirely and allow broker dealers or third parties, such as StartupValley, to file basic information about the company, deal arrangements, and general ideas of advertising on their behalf through a secure Application Programmable Interface (API).
  • Allow the form to be submitted after the sale of the first security, as it operates in today’s current market.  Having the form submitted 15 days prior, to a security being sold, conflicts with the way the JOBS Act was intentionally written.
  • Remove Rule 510T and the need for small businesses to file each and every public announcement regarding their deal with the Commission.
  • Allow the issuers to provide links to their main media pages and advertising sources (website, social sites, online profiles, search engines, etc.), when filing Form D. This will provide the Commission with easy access any current and past offerings advertisements produced by the company.
  • Remove the need to include legends and disclosure within each mention of your offering advertisement.
  • Allow the issuing company to include these disclosures on the main source of where they raise funds (e.g. on the crowdfunding portal page where the offering is made available).
  • Remove any broad penalty and provide a safe harbor to the portal and any third-party that is there to support the issuer in fundraising efforts, as long as this same third-party is operating in a lawful manner.

Please read the entire letter and comments from StartupValley regarding the proposed rules.

The following is a list of all comment letter written to the SEC.

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