SEC Postpones Implementation of Rules Eliminating the Ban on General Solicitation -

SEC Postpones Implementation of Rules Eliminating the Ban on General Solicitation

Gary Wolfe

On June 28th, the Chairwoman of the Securities and Exchange Commission Mary Schapiro announced to a Congressional committee that the SEC would not be able to meet its July 4th deadline on implementing rules related to easing the ban on advertisements for securities offerings prescribed by the Jumpstart Our Business Startups (“JOBS Act”).  In her testimony to the House Oversight and Government Reform Subcommittee, she noted that the SEC was given an “unrealistically short deadline,” for implementation of the new rules.

The lifting of the advertising restriction, looked forward to by many Regional Centers because of its ability to allow them to market to on-shore foreign investors, was one of the main focuses of the JOBS Act.  Currently, SEC regulations prohibit advertising through print ads in newspapers or magazines, websites, direct mail, seminars, tv or radio ads, amongst other means to accredited investors.  Accredited investors are defined as those that have either $1 million net worth or at least $200,000 in income for each of the past two years.  Typical EB-5 offerings are made to accredited investors.  The implementation of the JOBS Act is expected to allow EB-5 Regional Centers to greatly increase financial advertising to maximize their ability to fund job-creating projects.

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