Midweek pivot

As promised yesterday, I do have a followup post in mind on the subject of legislative definitions of social media.

CutbackWhen they turned in their grades, both Venkat Balasubramani and Kyle Hulten offered their own draft definitions. I want to post those definitions, along with grades and comments from Doug Cornelius that arrived as the first post went to press.

But today feels like a time to cut back to the other topic we were covering this past weekend, the question of when the SEC might get around to finishing what it started in August when it released rules to implement the lifting of the ban on general solicitation and general advertising in Rule 506 offerings.

The SEC should follow through. Not simply because they have missed the Congressional deadline for doing so. (As Doug, Joe Wallin and I have stated at different junctures, Congress could have amended the rule itself by legislation, as it did the accredited investor definition when it put Dodd-Frank together.) No, the real reason the SEC should act is that the industry needs the guidance. Inaction leaves the good guys in limbo and gives the bad actors ever more increasing sway.

Here's where we stand today on the story:

  • On Saturday, I wrote a post suggesting that the new SEC Chair, Elisse Walter, may have a different agenda for the rules that implement the lifting of the ban on general solicitation, an agenda that could involve more than simply implementing the ban. I hope I am wrong about that, but the fears arise out of statements she made back in August when the rules were proposed (for which proposed rules she did in fact vote affirmatively).
  • Also on Saturday, and remarked upon by me in this blog on Sunday, Joe Bartlett ran a post in VC Experts calling out how the old 506, the existing rule still in place and still at least nominally banning the use of general solicitation and general advertising, is being end-run, you might say (if you were inclined to eschew euphemisms). Joe's analysis suggests the real regulatory action of moment will be other than with implementing a new 506(c), overtly permitting general solicitation.
  • And then yesterday, Doug Cornelius ran a post on his Compliance Building blog, Crowdfunding and the Ban on General Solicitation, that concludes with the prediction that that the SEC isn't likely to finalize the general solicitation rule for some time, at least not until a new Commissioner is appointed to fill Mary Schapiro's seat. Doug is making that forecast by counting the votes.

So there we are. More to come; we may have to hurry up and wait.

Photo: John Martinez Pavliga / Flickr.


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