The Financial Report — Volume Two, No. 17 — 26 September 2013

Even some financial services industry professionals are confused. The 80-year-old prohibition on general solicitation ended on Monday of this week. This means it is now legal for companies to solicit certain qualified investors and to advertise that they are seeking to raise capital. This change was mandated under Title II of the JOBS Act.

The rules for crowdfunding, the ability of ordinary or ‘retail investors’ to make small investments in, typically, start-up businesses, have not yet been adopted, or even proposed, however. In fact, the mandate for crowdfunding is created by a different section, Title III of the JOBS Act, than the lifting of the ban on general solicitation.

It is possible that the confusion was caused by vocal supporters of crowdfunding, many of whom have grown impatient waiting for the SEC to propose and adopt rules for this potential new market. The JOBS Act had set the end of last year as the deadline for final rules on crowdfunding, a deadline that clearly has been missed…

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