September 26th, 2018
What AngelList is doing about the proposed SEC rules to overhaul startup financing
This just tweeted: AngelList has set up a webpage to educate everyone on the SEC's proposed rules that would impose pre-filing, information filing and mandatory legend requirements on Rule 506(c) offerings.
"506(c)" is the shorthand way for referring to the new version of Reg D Rule 506 under which it will, come September 23, be okay to "generally solicit and generally advertise" for investors, as long as you have taken reasonable steps to verify that all purchasers in the deal are accredited.
Those rules are final, will go into effect September 23, and include a list of "non-mandatory, non-exclusive methods" by which a company can be deemed to have satisfied the obligation to take "reasonable steps" to verify the accredited status of investors.
What's less known is that, on the same day it released the final rules lifting the ban on general solicitation and establishing new Rule 506(c), the SEC also proposed new rules that would significantly change Reg D itself.
And the proposed new rules aren't good for startups or emerging companies! Many of them would make new Rule 506(c) much less useful than Congress intended it to be. Other proposed changes would impact "old" Rule 506, now known as Rule 506(b), making it harder to raise money "the old way," as well.
AngelList has submitted a comment letter, too, to the SEC. This is a must-read for everyone that cares about the startup financing ecosystem.