On July 15 MedCity News published an article titled “‘Can’ doesn’t always mean ‘should’ when it comes to the SEC’s new rules for advertising fundraising“. The article explains that the Securities and Exchange Commission recently voted to adopt a piece of the JOBS Act which would remove a ban on general advertising for private securities. One of the biggest changes companies will face as a result of this new rule is they will be required to take reasonable steps to ensure that their investors are in fact accredited — that they have a net worth of more than $1 million (excluding their homes) or have a salary higher than $200,000. MBBP Corporate Attorney Joe Martinez believes this may be a drawback:
This type of an inquiry is much more intrusive than has been typical for angel investors in the past. I think it could scare away both experienced angel investors and folks new to the game. It also could add a bit more overhead to the financing process.
For more information please see the full article here.