The End of Ban on General Solicitation?
By Cydney Posner
And, apparently, yet another Republican House member is focused on eliminating some of the restrictions on capital raising. According to the WSJ, House Majority Whip Kevin McCarthy (R- Calif.) plans to introduce legislation that would direct the SEC to eliminate the ban on general solicitation for small businesses, allowing small, privately held companies to use direct mail or ads to solicit investors for private offerings. And you think you already get a lot of junk mail? So can we now look forward to seeing clever entreaties for funding pasted onto every frozen burrito at Safeway and every pair of socks on sale at Target? The WSJ reports that the SEC would maintain its existing requirement that these securities be sold only to accredited investors. If that's accurate, the universe of likely product vehicles for fund-raising ads might be more limited, a tasteful advertisement tied with raffia onto a bottle of the next Screaming Eagle perhaps? Rep. McCarthy's bill is set to be discussed by a House Financial Services subcommittee next Wednesday at a hearing on promoting small business capital formation. On a similar note, it appears that the McHenry bill, H.R.2930, to allow crowd-funding (see yesterday's email), has been introduced and referred to the House Committee on Financial Services.