The Venture Alley - A blog about business and legal issues important to entrepreneurs, startups, venture capitalists and angel investors.

CONTRIBUTED BY Rachel M. Perkinsrachel.perkins@dlapiper.com We often receive questions about the application of the “accredited investor” definition (copied at the end of this post) in Rule 501(a) of Regulation D, and one that’s come up from time to time is how trusts generally qualify as “accredited investors.”  Whether a trust is an “accredited investor” is a fact-specific determination, but generally speaking, the SEC has provided some guidance on trusts in the form of no-action letters and the Compliance and Disclosure Interpretations (“C&DI”).... More

CONTRIBUTED BYAndrew Ledbetterandrew.ledbetter@dlapiper.com   As anticipated in our previous blogs, the SEC yesterday proposed rules to permit general solicitation and general advertising in Rule 506 and Rule 144A offerings.  The release proposes to create a new Rule 506(c), in which the prohibition against general solicitation would not apply to offers and sales of securities, provided that: The issuer takes reasonable steps to verify that the purchasers are accredited investors; All purchasers of the securities are accredited investors, either because they come within one of the enumerated categories or the issuer reasonably believes that they do, at the time of the... More

CONTRIBUTED BYAndrew Ledbetterandrew.ledbetter@dlapiper.com In addition to legislative initiatives we’ve previously discussed, we continue to see efforts to relax the general solicitation prohibition in private offerings.  For example, the SEC's Advisory Committee on Small and Emerging Companies recently made a formal recommendation that the SEC take immediate action to permit general solicitation and advertising in private offerings under Rule 506 where the securities are only sold to accredited investors.  In addition, the Managed Funds Association, an organization of investment professionals in hedge funds, funds of funds, and managed futures funds, has used the somewhat uncommon process of submitting a petition for... More

CONTRIBUTED BYAndrew Ledbetterandrew.ledbetter@dlapiper.com As expected, the SEC has adopted final rules regarding the exclusion of a person’s primary residence, and related debt securing the residence, from the "net worth" standard for accredited investors.  The final rules are substantially similar to those the SEC previously proposed, which we summarized in this earlier post. Under the new rules, in calculating “net worth” for purposes of determining if a person’s individual net worth, or joint net worth with the person’s spouse exceeds $1,000,000:... More