Small business need-to-know and news-to-watch. A discussion of the private placement rules proposed. Financial governance
Excerpt: The Commission considered a Congressional mandate to amend our private placement rules, allowing issuers to offer securities by means of general solicitation and general advertising, provided only that all purchasers are accredited investors.
I cannot support the proposal, because it presents a framework that is not balanced and that fails to address the acknowledged increased vulnerability of investors. In fact, there is no consideration of any of the commenters’ proposals that would have decreased investor vulnerability.
Since at least 1962, the Commission has held that general solicitation and advertising are inconsistent with private offerings of securities. When general solicitation is used, investors need access to the disclosure and other protections that registration affords. In the absence of registration, and the resulting required disclosure, general solicitation and advertising can all too readily become a tool for deception and misinformation.
Investors are the source of capital needed to create jobs and expand business. I value true capital formation and economic growth, which requires investors to have both confidence in the capital markets and access to the information needed to make good investment decisions.