Yesterday the new securities solicitations rules went into effect. The law ends an 80-year ban on advertising private investments and allows startup companies to more openly publicize that they seek funding. However, the law is not without restrictions. Eligible investors will be limited to those sophisticated enough to evaluate the risk (i.e. annual income over $200,000 or net worth of $1 million). Further, the SEC continues to discuss whether to require companies to file advance disclosures of their public pitches, including disclosing how they intend to use the money. The new rules will certainly raise questions over what it is exactly that entrepreneurs can and cannot do.
Read more at Bloomberg here