"Here at Private Placements LLC we believe..." (cue amber waves of grain, etc)
DealPolitik seems to agree. (except for the grain bit)
From MoneyBeat:
On Wednesday the SEC adopted a new rule to deregulate many offerings of stocks and bonds. This deregulation will almost certainly revolutionize how small and other privately held businesses obtain financing in the coming years—unless scandals that may follow the deregulation force the SEC to change course.
The new rule is simple. It basically eliminates the 80-year old prohibition of advertising for investors in private placements so long as the only people who end up investing are relatively wealthy people. Once the new rule takes effect in approximately 60 days, companies can advertise, use Facebook FB +0.39% or otherwise publicly solicit investments as long as the only people permitted to invest meet the income or asset requirements described below.
The rule was adopted pursuant to the Jumpstart Our Business Startups Act (the JOBS Act) passed by Congress last year. The SEC expressed skepticism over this provision of the JOBS Act when it was being considered and a number of securities lawyers continue to believe it is inadvisable given the potential for abuse.
To understand why this rule is so revolutionary, one needs to understand why the sale of stocks and bonds is different than other commercial transactions and how the current regulatory regime arose.
If you buy a meal at a restaurant you are expected to pay for it before you leave the premises. When the restaurant buys the food it serves it either needs to pay cash or, if it can establish good credit, pay for the food within a short period like 30 days after the delivery.
But when the restaurant owner wants to build a second restaurant and needs to raise cash from investors to do so, he goes to those investors and says “Give me cash now and I will promise to pay you money in a few years.” That is a very different kind of transaction. First, such a transaction is like a magnet for crooks who can collect cash from strangers with no intention of every fulfilling the promise or even building the restaurant. Second, even perfectly honest restaurant operators might not communicate everything a potential investor needs to know to evaluate the risks of investing, or the restaurant owner might be a poor businessman.
After the abuses in the securities markets of the 1920s and the beginning of the Great Depression, Congress in 1933 addressed these issues with a comprehensive regulatory scheme for offering of stocks and bonds. It basically said that if a business owner wanted members of the public to invest, it would have to go through a complex registration and governmental review process. Plus, to protect investors, just about anyone associated with the investment — the company, directors, stock brokers and auditors — could be vulnerable to lawsuits if there were almost any problem with the disclosure, even if unintentional. There are few defenses to this type of litigation....MORE
