Toning down the anxiety over accredited-investor verificationBy http://profile.typepad.com/1237764140s22740 // January 21, 2014 in General Solicitation
There are times to turn up the heat, and then there are times to cool things down.
I happen to be in the camp of those who found nothing wrong with Richard Sherman's in-the-moment taunting of Michael Crabtree. Stoke it up!
But there's too much anxiety over the aspect of new Rule 506(c) which requires issuers to take "reasonable steps" to verify the accredited status of their purchasers.
That anxiety caused the startup community to complain about the first iteration of 506(c) proposed by the SEC, which contained no safe harbors but just a flexible standard that would have been shaped over time by industry practice. That gift horse was looked in the mouth, and the SEC issued final rules that gave folks the safe harbors they asked for.
Result: more anxiety! People now worry about being straight-jacketed into the safe harbors!
There are third-party services, too, handling accredited investor verification. But angel groups should be shaping industry practice, and it's good that they are stepping up to do so.