October 11, 2012
Not sure if earlier comments made it so here is a summary:
1. Create a new form for any issuer raising capital via Rule 506 (c)- Form UoP
a. Issuer must file Form UoP prior to closing- The form can have various categories for the proceed uses (i.e. Salary, rent, acquistion,etc) and range of amounts (i.e. $50-$65k per month)and projected length of time proceeds will carry operations (i.e. 9-10 months)
b. SEC registered/approved Escrow agents must close transaction and sign off on their line on Form UoP/Investors can check to see if the Escrow agent on the documentation is listed on SEC website.
c. Banking Institution taking receipt of funds must sign off on Form UoP agreeing it will disperse funds accordingly. If banking relationship transfers new bank must file on Form UoP and follow accordingly.
2. Take the burden of verifying Accreditation status from Issuer by forming Accredited Investor ID program.
a. Accredited Investors must (via web or regular mail) register with the Commission by inputting their financial information as well as take a Continuing Education exam on Private placement investing. This could be done annually to renew/revivify as well as update on any regulatory awareness the Commission wants to instill each year. Including the fact that bonfire placements must transact at a SEC registered Escrow agent.
b. Upon success and acceptance the Accredited Investor will receive his or her ID#. This will be what they input when subscribing to placements. It will also give the Commission a record and ability to track the investor's financial information they provided in the event of any future complaints. (i.e. Driver's license, voter registration)
c. The Escrow Agent will only accept investors documents with a valid Accredited Investor ID#. Now all closing information can be entered via the SEC website and with the ID#'s the commission will be able to track information by state of residence etc.
1. De motivate unethical operators to not have the ability to directly take control of proceeds
2. Investor's attesting Accredited status directly to the SEC (or SIPC?) should deter abuse as they will now be on record and in the Commission's system. This will also give the ability to have an electronic following of every transaction.
Hope these ideas may be helpful.