SEC Lifts Ban on Advertising for Private Investments

On Wednesday July 10, 2013, the SEC lifted its 80-year ban on advertising by private issuers of securities. The rule was the culmination of a process began by the JOBS Act passed last year. The move is designed to provide startups access to capital in a tight market dominated by institutional investors. Although the rule still limits investors to those designated “accredited”, it is an important step towards modernizing private security regulations. An “accredited” investor must meet certain qualifications such as a liquid net worth of $1 million or more. Critics of the ruling point to a lack of stringent guidelines to verify whether an investor is “accredited” or not and general concerns regarding the integrity of the private equity market. This is an important ruling for crowd sourcing as it democratizes the private equity market to some degree.

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