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New SEC Investor Bulletins on General Solicitation and Accredited Investors

Posted on Oct 6th, 2013

In September the SEC issued two new alerts via its Office of Investor Education and Advocacy for investors. These alerts concerned the SEC’s new general solicitation rules and the details on the new definition of “accredited investor.” These alerts are available here on the SEC’s website at the following links:

New General Solicitation Rules

Accredited Investor Definitions

The alert concerning the general solicitation rules reminds investors of the variety of risks inherent to private placements. For example, there are differences between the relevant offering documents of private placements and registered offerings; private placement documents do not generally present the investor with as much information concerning the issuer and the offering. Furthermore, the failure of an issuer to verify accredited investor status might well be a red flag about the overall health of the offering.

In tandem with this, the SEC’s “accredited investor” alert is designed to assist investors in knowing whether they are accredited investors. It details several examples of the “net worth” test in practice using factual examples.

The alerts are the latest of the SEC’s ongoing attempts to curb inappropriate use of the general solicitation rules, and to ensure that the risks of investments are clear to private placement investors.

If you have any questions about this topic, please feel free to email us.