{"id":5335,"date":"2012-06-24T00:00:00","date_gmt":"2012-06-24T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2012\/06\/investor_groups_securities_law"},"modified":"2022-04-28T13:21:46","modified_gmt":"2022-04-28T18:21:46","slug":"investor-groups-securities-law","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/investor-groups-securities-law\/","title":{"rendered":"Investor Groups, Securities Lawyers, and Business Community Comment on the JOBS Act Reg D\u2019s Investor Verification Process"},"content":{"rendered":"\n<p>The Jumpstart Our Business Startups Act\u2019s Title II eliminates the general solicitation and general advertising ban for offers and sales of private offerings under 1933 Securities Act Rule 144A and Reg D Rule 506 as long as the offerings\u2019 buyers are accredited investors. Now, five investor groups have written a letter to the Securities and Exchange Commission recommending that when the regulator implements this change, it should \u201cenhance the standards\u201d that issuers have to adhere to when confirming that only accredited investors are buying the offerings. The groups are the Consumer Federation of America, Fund Democracy, AFL-CIO, Consumer Action, and Americans for Financial Reform. They believe that such enhancements are necessary because removing the ban will significantly decrease investor protections even as fraudulent behavior is likely to increase. <\/p>\n<p>Right now, the SEC is in the process of writing rules for the new requirements that come with the statute. It has 90 days from April 5, when the JOBS act was enacted, to implement Title II.  While under the statute\u2019s Rule 506, the offerings\u2019 issuers are required to take \u201creasonable steps\u201d to confirm that buyers are accredited, Rule 144A issuers only have to \u201creasonably believe\u201d that the buyers are qualified institutional purchasers. In their letter, the investor groups argued that Congress most certainly intended for the Commission to set up more rigorous the standards for identifying accredited investors. They are recommending that at the very least, the SEC substantially increase the Rule 506\u2019s accredited investor standard for individual investors in each of the two most recent years to  at least $400,000 in yearly income (up from at least $200,000) or $2.5 million in net worth, with the primary residence\u2019s value subtracted (up from $1 million). They also said that the Commission should mandate that issuers that decide to engage in general solicitation and advertising file Form D in advance, enhance filing and recordkeeping requirements having to do with buyers\u2019 accredited investor status, and think about excluding non-accredited investors from taking part in all Rule 506 offerings.<\/p>\n<p>Offering different perspectives from these investors groups are securities lawyers and business groups. For instance, the National Investment Banking Association is pressing the SEC to make sure that any rule  promulgated on the verification process is one that issuers of all sizes can meet. Meantime, the Securities Industry and Financial Markets Association wrote a letter to the SEC in April arguing that the steps that Title II requires shouldn\u2019t create a greater burden than the existing \u201creasonable belief\u201d standard of Rule 506. The American Bar Association Business Law Section&#8217;s Federal Regulation of Securities Committee said in its letter that what are considered reasonable steps should be determined by circumstances, facts, and the accredited investor category that applies. The group believes that the Commission\u2019s rules should reflect existing practices and customs that take such factors into consideration. <\/p>\n<div class=\"read_more_link\"><a href=\"https:\/\/www.investorlawyers.com\/blog\/investor-groups-securities-law\/\"  title=\"Continue Reading Investor Groups, Securities Lawyers, and Business Community Comment on the JOBS Act Reg D\u2019s Investor Verification Process\" class=\"more-link\">Continue Reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The Jumpstart Our Business Startups Act\u2019s Title II eliminates the general solicitation and general advertising ban for offers and sales of private offerings under 1933 Securities Act Rule 144A and Reg D Rule 506 as long as the offerings\u2019 buyers are accredited investors. Now, five investor groups have written a letter to the Securities and [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[4026],"tags":[],"class_list":["post-5335","post","type-post","status-publish","format-standard","hentry","category-jobs-act"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Investor Groups, Securities Lawyers, and Business Community Comment on the JOBS Act Reg D\u2019s Investor Verification Process &#8212; Investor Lawyers Blog &#8212; June 24, 2012<\/title>\n<meta name=\"description\" content=\"The Jumpstart Our Business Startups Act\u2019s Title II eliminates the general solicitation and general advertising ban for offers and sales of private &#8212; June 24, 2012\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.investorlawyers.com\/blog\/investor-groups-securities-law\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Investor Groups, Securities Lawyers, and Business Community Comment on the JOBS Act Reg D\u2019s Investor Verification Process &#8212; Investor Lawyers Blog &#8212; June 24, 2012\" \/>\n<meta name=\"twitter:description\" content=\"The Jumpstart Our Business Startups Act\u2019s Title II eliminates the general solicitation and general advertising ban for offers and sales of private &#8212; June 24, 2012\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Shepherd Smith Edwards &amp; Kantas, LLP\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Investor Groups, Securities Lawyers, and Business Community Comment on the JOBS Act Reg D\u2019s Investor Verification Process &#8212; Investor Lawyers Blog &#8212; June 24, 2012","description":"The Jumpstart Our Business Startups Act\u2019s Title II eliminates the general solicitation and general advertising ban for offers and sales of private &#8212; June 24, 2012","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.investorlawyers.com\/blog\/investor-groups-securities-law\/","twitter_card":"summary_large_image","twitter_title":"Investor Groups, Securities Lawyers, and Business Community Comment on the JOBS Act Reg D\u2019s Investor Verification Process &#8212; Investor Lawyers Blog &#8212; June 24, 2012","twitter_description":"The Jumpstart Our Business Startups Act\u2019s Title II eliminates the general solicitation and general advertising ban for offers and sales of private &#8212; June 24, 2012","twitter_misc":{"Written by":"Shepherd Smith Edwards &amp; Kantas, LLP","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.investorlawyers.com\/blog\/investor-groups-securities-law\/#article","isPartOf":{"@id":"https:\/\/www.investorlawyers.com\/blog\/investor-groups-securities-law\/"},"author":{"name":"Shepherd Smith Edwards &amp; Kantas, LLP","@id":"https:\/\/www.investorlawyers.com\/blog\/#\/schema\/person\/e0240e0754684b69f7d6a7de1b9f1431"},"headline":"Investor Groups, Securities Lawyers, and Business Community Comment on the JOBS Act Reg D\u2019s Investor Verification Process","datePublished":"2012-06-24T05:00:00+00:00","dateModified":"2022-04-28T18:21:46+00:00","mainEntityOfPage":{"@id":"https:\/\/www.investorlawyers.com\/blog\/investor-groups-securities-law\/"},"wordCount":596,"articleSection":["JOBS Act"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/www.investorlawyers.com\/blog\/investor-groups-securities-law\/","url":"https:\/\/www.investorlawyers.com\/blog\/investor-groups-securities-law\/","name":"Investor Groups, Securities Lawyers, and Business Community Comment on the JOBS Act Reg D\u2019s Investor Verification Process &#8212; Investor Lawyers Blog &#8212; June 24, 2012","isPartOf":{"@id":"https:\/\/www.investorlawyers.com\/blog\/#website"},"datePublished":"2012-06-24T05:00:00+00:00","dateModified":"2022-04-28T18:21:46+00:00","author":{"@id":"https:\/\/www.investorlawyers.com\/blog\/#\/schema\/person\/e0240e0754684b69f7d6a7de1b9f1431"},"description":"The Jumpstart Our Business Startups Act\u2019s Title II eliminates the general solicitation and general advertising ban for offers and sales of private &#8212; June 24, 2012","breadcrumb":{"@id":"https:\/\/www.investorlawyers.com\/blog\/investor-groups-securities-law\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.investorlawyers.com\/blog\/investor-groups-securities-law\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.investorlawyers.com\/blog\/investor-groups-securities-law\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.investorlawyers.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Investor Groups, Securities Lawyers, and Business Community Comment on the JOBS Act Reg D\u2019s Investor Verification Process"}]},{"@type":"WebSite","@id":"https:\/\/www.investorlawyers.com\/blog\/#website","url":"https:\/\/www.investorlawyers.com\/blog\/","name":"Investor Lawyers Blog","description":"Published By Investment Fraud Attorneys \u2014 Shepherd Smith Edwards &amp; Kantas, LLP","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.investorlawyers.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.investorlawyers.com\/blog\/#\/schema\/person\/e0240e0754684b69f7d6a7de1b9f1431","name":"Shepherd Smith Edwards &amp; Kantas, LLP","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/c7f8f04990816cd4044977eb59908da8c8d1ae487cc919cebd7027b74a0740a3?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/c7f8f04990816cd4044977eb59908da8c8d1ae487cc919cebd7027b74a0740a3?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/c7f8f04990816cd4044977eb59908da8c8d1ae487cc919cebd7027b74a0740a3?s=96&d=mm&r=g","caption":"Shepherd Smith Edwards &amp; Kantas, LLP"},"sameAs":["https:\/\/www.investorlawyers.com\/"]}]}},"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/pedX9K-1o3","_links":{"self":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/5335","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/comments?post=5335"}],"version-history":[{"count":1,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/5335\/revisions"}],"predecessor-version":[{"id":26906,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/5335\/revisions\/26906"}],"wp:attachment":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/media?parent=5335"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/categories?post=5335"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/tags?post=5335"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}