Thoughts on yesterday's SEC webcast

First of all, let's be clear that yesterday's meeting was not a meeting of the commissioners of the Securities and Exchange Commission.

It was, instead, a meeting of an advisory group to the SEC.

And so, necessarily, there could be no important votes taken, no new rules authorized, nothing as momentous for startup and emerging company financing as the July 10 meeting of the Commissioners, when two final rule sets were approved and a radical new rule set was proposed.


But the meeting was important. The advisory committee was there, key SEC staff were there, an important state securities regulator was there.

And so many of the right policymakers were either there in person or represented, and got the benefit of hearing David Verrill, Chair, and Marianne Hudson, Executive Director, present, on behalf of the Angel Capital Association, an excellent overview of how important angel financing is in the startup financing ecosystem and to America's overall innovation economy.

Yes, it continues to be important to educate policymakers about some of the things those of us in the startup financing ecosystem take for granted.

I understand from Jean Peters that the ACA slides presented yesterday will be posted to the ACA site. I'll try to remember to link to that when I see it.

The most dramatic moment of the meeting yesterday was when Catherine Mott (pictured above), a member of the advisory group, former Chair of the ACA, and angel investor, asked the staff whether demo days and pitch events - common features of today's startup financing ecosystem, ostensibly okay in the past under old 506 - constituted general solicitation.

I was going to write that Mott asked the question "pointedly." But that would be misleading. Mott is one of those fearless individuals who disarms others with unfailing politeness and charm.

When she did not get a straight answer to her question, Mott persisted. It is exactly the right question to ask, of course. Come September 23, people are going to need to know what box to check: 506(b) or 506(c). So they necessarily need to know what "general solicitation" is, or what activities which today are ostensibly under 506(b) will transfer over to 506(c).

At the same time, you can understand staff reluctance to opine on this matter. They cannot tacitly admit, I don't think, that the current prohibition on general solicitation in Rule 506 offerings is being flaunted. (Which it is.)

Joe Wallin, Doug Cornelius, Lori Smith and I were live blogging the meeting. See the transcript here.

Joe went absolutely nuts with delight when Mott pressed her question. You can see his almost real-time summary of the exchange at minute five of this video. (Yes, Joe was doing double duty, liveblogging on my blog and at the same time participating in Broc Romanek's Spreecast on Reg D!)

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