In 2009, the SEC began requiring that the Form D notice filings used for Regulation D offerings be filed electronically. The SEC’s motivation for the mandatory electronic filing included a desire to make information included on Form D filings more easily available to and searchable by the public.
A By-Product of Form D Electronic Filing
Well, it worked – as I’ve learned. Within days of filing Form D in connection with clients’ private placement offerings, announcements of the clients’ Form D notices and the information therein begins appearing on websites and blogs. There’s one little hiccup with that situation.
Many Securities Registration Exemptions Used by Start-ups Prohibit Advertising
Regulation D is a common exemption to securities registration used by companies seeking financing. In order to qualify for one of the Regulation D exemptions, the company cannot use advertising to find investors. (There is an exception to the no- advertising rule for certain Rule 504 offerings.)
Posting information online or using any type of viral email marketing to find capital would likely be considered advertising and could make the company ineligible for the more streamlined securities law compliance procedures offered by Regulation D.
What Companies Should Not Do with Those Postings about Their Form D Filings
That means you should not re-distribute links to websites that mention your Form D notice filing and private offering. For example, DON’T mention those third-party announcements on the company’s Twitter account, blog or other social media. Re-distribution by the company might be viewed as solicitation and general advertising.
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