The End of Ban on General Solicitation?

By Cydney Posner

And, apparently, yet another Republican House member is focused on eliminating some of the restrictions on capital raising. According to the WSJ, House Majority Whip Kevin McCarthy (R- Calif.) plans to introduce legislation that would direct the SEC to eliminate the ban on general solicitation for small businesses, allowing small, privately held companies to use direct mail or ads to solicit investors for private offerings. And you think you already get a lot of junk mail? So can we now look forward to seeing clever entreaties for funding pasted onto every frozen burrito at Safeway and every pair of socks on sale at Target? The WSJ reports that the SEC would maintain its existing requirement that these securities be sold only to accredited investors. If that's accurate, the universe of likely product vehicles for fund-raising ads might be more limited, a tasteful advertisement tied with raffia onto a bottle of the next Screaming Eagle perhaps? Rep. McCarthy's bill is set to be discussed by a House Financial Services subcommittee next Wednesday at a hearing on promoting small business capital formation. On a similar note, it appears that the McHenry bill, H.R.2930, to allow crowd-funding (see yesterday's email), has been introduced and referred to the House Committee on Financial Services.

This content is provided for general informational purposes only, and your access or use of the content does not create an attorney-client relationship between you or your organization and Cooley LLP, Cooley (UK) LLP, or any other affiliated practice or entity (collectively referred to as “Cooley”). By accessing this content, you agree that the information provided does not constitute legal or other professional advice. This content is not a substitute for obtaining legal advice from a qualified attorney licensed in your jurisdiction, and you should not act or refrain from acting based on this content. This content may be changed without notice. It is not guaranteed to be complete, correct or up to date, and it may not reflect the most current legal developments. Prior results do not guarantee a similar outcome. Do not send any confidential information to Cooley, as we do not have any duty to keep any information you provide to us confidential. This content may have been generated with the assistance of artificial intelligence (AI) in accordance with our AI Principles, may be considered Attorney Advertising and is subject to our legal notices.