One of the goals of the federal JOBS Act, enacted in 2012, was to expand the ability of companies (both operating companies and funds) to make non-registered securities offerings using general solicitation and advertising. Offers made through general solicitation and advertising have been prohibited under the SEC's private offering safe harbor ever since Regulation D was adopted in 1982, and many have complained that the restriction was pointless where all purchasers were accredited investors as defined in Regulation D. However, the SEC believed a change required legislation. The JOBS Act made that change. However, the Act, and the new rule adopted in 2013, imposed a new requirement - the issuer of the securities must take reasonable steps to "verify" that all the purchasers in a general solicitation offering are accredited investors. Failure to take reasonable verification steps would violate the rule even if it turned out that all purchasers actually were accredited.… Continue Reading