Our Comment Letter to the SEC on General Solicitation

As many of you may know, the SEC has lifted the 80-year-old ban on general solicitation and paved the path towards greater capital accessibility for startup companies. Starting September 23, 2013, entrepreneurs will be able to take advantage of this new provision – Rule 506(c), to be specific – and publicly advertise their offerings. For those unfamiliar with the implications, what this means is that companies will be able to tap into a broader network of investors and raise capital in a shorter amount of time by leveraging publications, social media, and general email communications to market their securities.

As part of these changing regulations, however, the SEC has proposed new rules that make the disclosure process much more rigorous, effectively hampering the capital-raising endeavors of entrepreneurs who seek to rely on general solicitation. Among other things, an arbitrary 15-day waiting period before the commencement of a general solicitation offering and the temporary requirement to submit all written general solicitation materials to the SEC are stringent rules that, if adopted, will severely compromise the efficacy of the JOBS Act and dissuade entrepreneurs from relying on this new tool.

Return on Change has submitted a comment letter to the SEC regarding these proposed rules on general solicitation. You can read the full letter below or on the SEC website.


By Sang Lee

See also: Why Title II Isn’t Bad for Angel Investors


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Sang H. Lee
Sang is the founder and CEO of Return on Change. He's constantly searching to help startups that are looking to change the world! He's a leader in equity crowdfunding and is always happy to help entrepreneurs and startups. He previously worked as an investment banker in the energy field at WestLB and BNP Paribas, accruing a wealth of expertise in financial regulation, business, and financial structuring. Sang is also the Executive Director of CF50, a global think tank of thought leaders within the crowdfunding industry. You can find him on Google+ and Twitter.
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  1. Return on Change's Crowdfunding Comment Letter to the SEC - 02/04/2014


  2. 3 Things to Know About General Solicitation - 09/19/2013

    […] by now that these amendments will make the capital raising process a lot more cumbersome. We feel the same. So what can startups do on the 23rd? The SEC has yet to adopt these amendments, so […]

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