Reuters: Regulatory News: US SEC nears lift of ban on advertising private stock offerings

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US SEC nears lift of ban on advertising private stock offerings Aug 29th 2012, 14:20 By Alexandra Alper WASHINGTON | Wed Aug 29, 2012 10:20am EDT WASHINGTON Aug 29 (Reuters) - U.S. securities regulators are expected on Wednesday to propose lifting a long-standing ban on general advertising for private securities offerings, a measure that some say will spur economic growth but one which critics fear could pave the way for fraud. The rule, required by the controversial JOBS Act passed by Congress earlier this year, would allow companies to advertise to investors so long as they take "reasonable steps" to verify that the purchasers are "accredited investors." Accredited investors include those with net worth of at least $1 million or an annual income of at least $200,000. But even as the Securities and Exchange Commission prepared for a vote on the proposal later on Wednesday, it expressed concern that the rule's rollback may have the potential to harm investors. "I recognize that there are very real concerns about the potential impact of lifting the ban on general solicitation," SEC Chairman Mary Schapiro said in prepared remarks. "While I'm prepared to bring forward today's narrow proposal, I look forward to the continued examination of this critically important market." It is the first rule the SEC has proposed as part of the JOBS Act, which was signed by President Barack Obama in April. The law scales back a variety of securities regulations with the aim of helping smaller companies raise capital and spur job growth. The law passed Congress with bipartisan support, but faced opposition from consumer and investor advocates as well as some Democrats who said the law goes too far in cutting back important investor protections. Link this Share this Digg this Email Reprints

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