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SecondMarket today released the following statement from Founder and CEO Barry Silbert on the Securities and Exchange Commission’s adoption of amendments to eliminate the prohibition against general solicitation and general advertising in certain securities offering conducted pursuant to Rule 506 of Regulation D under the Securities Act and Rule 144A under the Securities Act, as mandated by Section 201(a) of the JOBS Act:
“I applaud the SEC for fulfilling its mandate under the JOBS Act to lift the 80-year-old ban on general solicitation and general advertising. Today’s action will have a significant impact on the capital formation process, and is an important step forward in bringing today’s regulations into the 21st century.
“After today, a much deeper, broader group of accredited investors will have the opportunity to hear about – and potentially invest in – private companies and funds. By allowing issuers to solicit to a broader group of potential investors, the SEC has today showed its commitment to democratizing the investing process and putting an end to yesterday’s “old boy” investor networks.
“The lifting of the ban on general solicitation will prove to be transformative for issuers and investors. The SEC’s final rule will include a non-exclusive safe harbor provision for accreditation that will allow for issuers to delegate that responsibility to third parties, a recommendation that SecondMarket proposed to the SEC last year. In anticipation of the final rule, SecondMarket has developed a general solicitation product that will enable issuers to handle the increased volume of investor interest and heightened regulatory requirements that will accompany their general solicitation efforts.
“For issuers that decide to generally solicit, and don’t have the infrastructure or resources to manage incoming interest, they will be able to offload that administrative burden to SecondMarket, which has spent more than a year developing the infrastructure to satisfy the SEC’s requirements to verify the accreditation status of investors. We believe that our general solicitation product and our proprietary accreditation verification process will soon become the industry standard, and we look forward to partnering with a diverse group of private companies and funds as they begin to experiment with the various promotion avenues that are now available to them.”