The Jumpstart our Business Startups Act (JOBS Act) was signed into law on April 5, 2012 and was to (among other things) allow businesses to generally solicit investors for certain securities offerings as well as create guidelines for crowdfunding. The Jobs Act required the SEC to issue rules by the end of 2012, and set a due date for the proposed rules of July 4, 2012. They missed the deadline.
On August 29, 2012 the SEC released a set of proposed rules that have been reviewed and commented on by just about everyone with an interest in securities laws; over 220 comment letters. Then everyone waited and waited and is still….waiting.
On April 17, 2013 SEC Commissioner Elise Walter told the House Committee on Financial Services that concern about Fraud is delaying the release of the rules to allow general advertising for certain securities. She stated that the concern over fraudulent securities offerings made the SEC take a closer look at the proposed rules to determine how to better protect the investors.
Ms. Walter said the SEC would need additional resources to enforce the new rules, but that the budget sequestration would impact the SEC’s hiring.
So, what should you expect? More waiting. I would not suggest attempting to generally solicit in anticipation of the final rules being released, but maybe in the meantime your business could consider using some of the following crowdfunding like sites:
Also see wikipedia for a robust list of crowdfunding sites.
Author: Jennifer Trowbridge, Esq. Stoecklein Law Group, LLP