August 17, 2013
The new rules for Reg D solicitation are a step in the wrong direction. Over a year ago, Congress made it clear, via a new law, to make private investing more accessible, not less. That law included a provision to make solicitation possible, not to punish entrepreneurs for raising funding.
The one year "penalty box" is egregious. Remove that from the proposed rules.
The pre-filed Form D serves no market function. Investors are not going to search Edgar for that filing, vs. reading the already expected PPMs, term sheets, etc.
Filing any Form D or other form stating that soliciation will take place via a web site, via a specific Angel group, via specific industry events also serve no market function. Investors do not care if an entrepreneur has notified the SEC of an advertisement, they only care what is in that advertisement.
If you want to protect investors, then provide them an easy path to complain to the SEC of fraud. Let the SEC sue those companies that are committing fraud. Let the courts throw those entrepreneurs in jail and fine them and punish them well beyond a one year "penalty box".
The existing no soliciation is a better set of rules than what the SEC is proposing for solicitation. Please forget this proposal and try again. This time from the shoes of the investors, rather than what is easiest for the regulators.