Tuesday, July 23, 2013

SEC Rule 506 (c) Integration Pitfalls: Don't Use the SEC's New Advertising and Solicitation Private Placement Rule to Saw Off the Limb You are Sitting On

 By Jim Verdonik

I'm an attorney with Ward and Smith PA . I also write a column about business and law for American Business Journals, have authored multiple books and teach an eLearning course for entrepreneurs.  You can reach me at JFV@WardandSmith.com or JimV@eLearnSuccess.com.  Or you can check out my eLearning course at http://www.elearnsuccess.com/start.aspx?menuid=3075 or http://www.youtube.com/user/eLearnSuccessor or you can purchase my books at http://www.amazon.com/Jim-Verdonik/e/B0040GUBRW

Have you ever seen a cartoon where the character who is sitting on a tree limb saws off the part of the limb between him and the tree trunk?
Sometimes the tree limb and the cartoon character fall with a big crash.

But in another version of the same branch-sawing situation, the entire tree trunk falls and the cartoon character and the tree limb remain safely suspended in thin air.
Let's talk about how you avoid using new SEC Rule 506 (c)'s advertising and general solicitation provisions to saw off the tree limb you are sitting on.

Before we begin talking about Rule 506(c) and advertising, let me ask which type person are you:
  • The optimist who thinks the whole tree trunk will fall down while you remain safely perched on your branch?
  • Or are you a pessimist who always worries that the laws of gravity will crash you to earth as soon as you saw off the branch you are sitting on?
I ask these questions, because once you start using Rule 506 (c) to advertise or conduct a general solicitation, you will cut yourself off from the ability to raise capital using many other private placement exemptions – at least for a while.  If for any reason your advertising campaign doesn't help you raise the capital you need to survive and grow, you'll crash to earth like that cartoon character, unless you have a back-up plan that suspends the laws of gravity.
So, if you decide to advertise, understand that you are gambling.  Like all other bets, you win some and you lose others.
Now, let's start exploring what happens if you lose your SEC Rule 506 (c) advertising bet.

Rule 506 (c) Advertising and General Solicitation
Here's a link to the page of the SEC' s website that contains SEC Release 33-9415 about advertising and general solicitations in Rule 506 (c) private placements: http://www.sec.gov/rules/final.shtml  Most of the SEC' s release explains Rule 506 (c) and the reasons for it, but the full text of Rule 506 (c) is at the end of the release.

You won't find any direct statement in Rule 506 (c) that permits advertising or general solicitations.  Instead, the SEC backed into allowing advertising and general solicitations by not including in the new Rule 506 (c) the same prohibition against advertising and general solicitations that Rule 506 (b) had and continues to have.  But does avoiding actually directly giving permission to advertise and solicit generally reflect the fact that the SEC has only approved Rule 506 (c), because Congress and the President required it in the JOBS Act of July 2012?

When you try to predict how the SEC will interpret and enforce Rule 506 (c), it's useful to remember that people at the SEC didn't just wake up one day and say:  "I have a great idea.  Let's permit businesses to advertise for investors in private placements."

That's another way of predicting that the SEC will probably strictly enforce accredited investor verification rules, anti-fraud provisions that relate to what you say in advertising and how you say it and the integration rules we will focus on in this article. 
Ask yourself:  What would happen if you ask your father to let you do something your mother already said you couldn't do?  Assuming that mom didn't tell your father not to overrule her decisions (a big assumption), your mom might reluctantly go along with what he agreed you could do.  But she will probably hold you to the letter of what you agreed with your father.  She might even throw barriers in your way.  In any event don't expect too many breaks or sympathy, if it doesn't turn out like you planned.  The SEC will probably react the same way to advertising mandates in the JOBs Act, because the JOBs Act ordered the SEC to allow advertising in Rule 506 (c) private placements after many decades where advertising was prohibited.

Rule 506 (c) Presents Pitfalls for Poor Planning

 It's not unusual for businesses to start private placement offerings intending to sell securities only to accredited investors.  Their lawyer tells them it's the best way to protect them and reduce their legal and other offering expenses.  So, most businesses start out on the right path

 But "the path of the righteous man is beset on all sides" by temptation.  When they find people who are not accredited, but who are willing to invest, many businesses want to accept these investments.  How do you turn down money, when it's so difficult to raise money?

It's difficult to resist temptation, especially if you have a stack of unpaid bills or payroll is coming due at the end of the week and your checking account is on life support.

Practical circumstances sometimes force businesses to change their minds and accept investments from non-accredited investors even though they know there are many good reasons not to do that.  When businesses change their minds about raising capital from investors who are not accredited, they often have to change their offering documents.  They might also limit their ability to raise capital in their later offerings.  But despite these drawbacks, it's often possible to adjust to this change in strategy.

Generally, younger businesses are more likely to change direction and accept the small investments that non-accredited investors can supply.  So, any rule that penalizes you for changing your strategy will probably do the most damage to the smallest businesses.

Changing your strategy about accepting capital from non-accredited investors will be much more difficult in Rule 506 (c) offerings because:

·         After you start advertising or conducting a general solicitation, you can't pretend you didn't do it.
·         After you begin to advertise or conduct a general solicitation, your alternatives for selling securities using another private placement exemption becomes extremely limited. 

For lack of a better word, your later offering may become "tainted" by your advertising and general solicitation efforts.

"Integration" is the Magic Word

There's an obscure securities term you might not be very familiar with, but you are about to begin hearing a lot more about it, because of Rule 506 (c).  The magic word is "Integration!"

Integration is a magic word, because the SEC uses integration to combine two securities offerings that are nominally different to determine whether the combined offering satisfies any single offering exemption.  It's really just a tool the SEC uses to prevent lawyers from dividing what is essentially a single offering into two or more separate offerings because the combined offering wouldn't fit a single securities exemption. 

Partially complying with two different exemptions means you don't have any actual exemption from the registration requirements of securities laws.  Selling securities, when you don't have an exemption from registration, gets you into trouble.

Let's discuss an example of how integration works. 

A Rule 504 exemption allows you to sell to people who are not accredited investors without specific disclosure requirements as long as you don't raise more than $1 million during any rolling 12-month period.  Rule 506 (b) doesn't have any dollar limit, but Rule 506 (b) will not give you flexibility in what and how you make disclosures, unless you sell only to accredited investors.  If non-accredited investors purchase securities in a Rule 506 (b) offering, you have to comply with detailed disclosure rules that often increase offering expenses. 

Some people try to get the best of both Rules - a combination of no dollar limits and the ability to sell to non-accredited investors with flexible disclosure requirements.  To accomplish this, they try to divide the offering into two pieces – a Rule 504 offering for non- accredited investors with a $1 million maximum and a Rule 506 (b) offering to raise a larger amount only from accredited investors.

The SEC uses its "integration" tool to prevent you from doing that.  I note that "aggregation" is a different tool that also prevents you from dividing one big offering into two or more smaller offerings. 

How do you know whether the SEC will integrate what you decide to call two separate offerings into one offering?

Rule 502 (a) lists five factors to consider to determine whether these offerings will be integrated:  

·         Is the two offerings a single plan of financing?  

·         Do both offerings sell the same class of securities?  

·         Are the offerings conducted at the same time?

·         Are the securities being sold for the same type of consideration?

·         Will the sales proceeds from both offerings be used for the same general purpose? 

Rule 502 (a) doesn't tell you how to much weight to give each factor or how many factors mean integration will occur or will not occur.

The SEC also expansively defines parts of Rule 502 (a) like the terms "same class of securities" and "same general purpose."  Virtually all sales for cash are deemed to be for the same general purpose, if the money will be used to operate your existing business.  The SEC won't buy into the concept that one offering to raise money for R & D is different from an offering used to build your marketing and sales team.  It's all working capital to the SEC.  Likewise, the SEC treats all securities that are convertible into common stock as an offering of common stock.  So, non-convertible debt and non-convertible preferred stock are your only alternatives for creating a different class of securities.  For this reason, 90% of offerings start off the integration analysis with two black marks against them. 

So, in many cases it's clear that two offerings will be integrated under Rule 502 (a)'s five-part test, but in most other situations you end up with ambiguity - the SEC might integrate the two offerings, because two or three of the factors for integration are present.

To resolve the ambiguity this five-factor test creates, Rule 502 (a) of Regulation D offers a safe harbor:

"Offers and sales that are made more than six months before the start of a Regulation D offering or are made more than six months after completion of a Regulation D offering will not be considered part of that Regulation D offering, so long as during those six month periods there are no offers or sales of securities by or for the issuer that are of the same or a similar class as those offered or sold under Regulation D." 

By not giving you a clear target, the SEC intentionally preserves its ability to challenge your decisions.  By creating ambiguity on one hand and a clear 6-month test on the other hand, the SEC is steering you toward deciding that it is prudent to separate you your two offerings by six months or longer.

Given the penalties for being wrong, why would anyone decide to swim upstream against the SEC's strong 6-month current?

So, to take advantage of this safe harbor that guarantees you will avoid integration and qualify for your exemption from registration, most businesses try to separate two offerings by six months or more.  That sounds simple, right?  Just don't accept any new investment for six months, right?


You also cannot make "offers" during that six month period quiet period, if you want to qualify for the safe harbor.

How do you stop making offers? 

In a world where you couldn't advertise your offering, it was relatively easy to stop making offers.  You simply told your sales team to stop talking to people.  Hopefully, they complied with your instruction.

But if you start advertising or conducting a general solicitation, you might have to be more proactive to avoid continuing to make offers.

·         If you have an investment solicitation on your website, take it down.

·         If you advertise on other websites or in newspapers or in other publications, cancel your advertising contract.

That still sounds simple.  All you have to do is to stop doing what you were doing.

That works in traditional advertising.  But increasingly people use social media to sell.  So, it's highly likely that some business will use social media to sell securities.

One of the primary reasons people like social media is that it sometimes takes on a life of its own – it "goes viral."  That makes social media cheap to use.  Once you initiate something, it can keep moving through social media without you doing anything to keep it going. 

But if something goes viral and you lose control of it, how does an offer embedded in a viral video affect your ability to turn off your offering for six months?

If you launched your video just before the six month period began, will anyone believe that you didn't plan to use it to continue to make offers while you pretended not to?

What can you do if people contact you during the six month quiet period?

·         Can you take their names and contact information and call them six months later?

·         Can you tell them to call you in six months?

These questions are complicated by the fact that the securities law definition of an "offer" includes soliciting someone to make an offer to buy your securities.  So anything that causes people to contact you about investing in your business is the same as offering to sell securities, which you cannot do for six months if you want to qualify for Rule 506 (a)'s safe harbor to avoid integration.

The history of new rules is that issues like these will eventually be worked out over time as people talk with the SEC and request clarification and as the securities industry adopts standardized practices.  But the initial period after a new rule comes into effect often creates a "Wild West" environment when no one knows what the law lets you do or not do.

Form D and Other Regulation D Changes

"How will the SEC know?"

You are entering dangerous territory when someone asks: how will the SEC know?

Of course, the SEC conducts extensive investigations and monitors the media, but the simplest answer to - how will the SEC know - is that you will tell the SEC.

When you conduct a private placement under Regulation D, you have to file a Form D with the SEC.  Many states also require you to file a Form D.  That's where you tell the SEC you are advertising.

To help the SEC monitor advertising, in release 33-9415 the SEC approved an amendment to Form D that requires you to check a box if you intend to rely on Rule 506 (c) to advertise or conduct a general solicitation.  If you continue to rely on Rule 506 (b) without advertising or doing a general solicitation, you must check a Rule 506 (b) box.  You can't hedge your bets and wait to see which exemption works better for you.  You have to make this choice when you you’re your Form D.  The SEC' s release indicates it would be inconsistent to check both boxes:

"We are of a view that an issuer will not be permitted to check both boxes at the same time for the same offering.  We remind issuers that once a general solicitation has been made to purchasers in the offering, an issuer is precluded from making a claim of reliance on Rule 506 (b), which remains subject to the prohibition against general solicitation, for that same offering."

In footnote 142 of release 33-9415, the SEC explains that this is to prevent you from selling securities in a Rule 506 (b) offering to purchasers who become interested because of advertising or the general solicitation you did in the Rule 506 (c) offering.

 This position by the SEC is designed to achieve two purposes:

·         Prevent you from using advertising to attract people who are not accredited investors.
·         Prevent people who have violated securities laws (a/k/a "Bad Actors") from using advertising to attract investors.

I note that in release No. 33-9416, the SEC is proposing to advance the filing date of Form D to before any advertising takes place and to require you to submit advertising materials to the SEC before you use them.  So, you should not assume your advertising will go unnoticed.
Alternative Offering Strategies

So, what do you do if you are desperate for money and can't wait six months to sell securities?

Section 4 (2) of the Securities Act creates a general exemption and allows you to sell to non-accredited investors.  Regulation D creates specific rules for exemptions, but the broad Section 4 (2) exemption is still available.  Because you cannot advertise in a general Section 4 (2) offering, you should try to sell to people who had a substantial pre-existing relationship with your business and be able to show that the advertising and general solicitation you conducted in your earlier Rule 506 (c) offering had no influence on any investor in your Section 4 (2) offering.  You should also try to structure an offering that meets the criteria for not integrating that the Section 4 (2) offering with your abandoned Rule 506 (c) offering. 

Section 4 (2) does not pre-empt state securities laws.  Therefore, you will need to find state exemptions from registration and deal with state prohibitions against advertising.

If you manage to overcome all the state and Federal obstacles, Section 4 (2) private placements to non-accredited investors probably won't help you to raise much money.  Most Section 4 (2) offerings involve only a small number of investors.  If each investor is non-accredited, the amount you raise from each investor is likely to be small.  So, at best you are likely to raise just enough money to keep the business' doors open for a short time or to fund only part of your business plan.  That increases risks for both you and your investors, because you haven't achieved your capital raising goals.

The integration issues we just discussed are present any time you do a new offering, whether or not you advertised in the first offering.  In an abandoned Rule 506 (c) offering where you advertised for investors or conducted a general solicitation, we also have to deal with issues related to advertising.  How do you ensure that the advertising you did in the first offering didn't attract investors to your second offering?  The best way to deal with this issue is to do your second offering under an exemption that allows advertising.  Your choices for doing that are limited.

·         Rule 504 (b) allows you to advertise and make a general solicitation if the state you are selling in allows advertising or requires registration.  In theory you might be able to raise a little money in a Rule 504 offering even though you advertised when you conducted your 506 (c) offering.  But Rule 504 offerings are limited to $1 million during any 12-month period and state law restrictions often make it difficult to raise money.
·         If you cannot use the advertising provision of Rule 504, investigate whether you can do a Regulation A offering.  Regulation A offerings are more expensive and more complicated than other ways to raise capital.  Regulation A may be the only alternative to waiting six months to raise capital, but it usually takes several months to do a Regulation A offering.  So, you don't save much time compared to waiting six months to do a Rule 506 (b) offering.
Another alternative for raising capital is to look for investors who are located outside the United States.  The registration requirements of the Securities Act of 1933 do not require you to register offers and sales of securities that are made to non-US persons outside the United States.  SEC Regulation S provides a type of safe harbor to determine if your offering is outside the U.S.  The SEC's release that approved Rule 506 (c) states that "concurrent offshore offerings that are conducted in compliance with Regulation S will not be integrated with domestic offerings that are conducted in compliance with Rule 506."  But Regulation S offerings are impractical for most small and new businesses, because they don't know many investors outside the US who are willing to invest in a new venture so far from home.

These limited alternatives create a problem for cash starved businesses that cannot wait six months to raise capital after an aborted Rule 506 (c) offering in which they advertised for accredited investors.

SEC Should Reduce the Integration Safe Harbor Waiting Period to Thirty Days
There is nothing unusual about two or more private placement offerings being integrated, but Rule 506 (c) raises unusual integration issues, because it allows advertising and general solicitation.
This makes it more than a matter of counting investors and counting the dollars raised.
You have to deal with the issue of whether your prior Rue 506 (c) offering public advertising and general solicitation continues to have an effect on people buying in the new private offering, if your exemption for the new offering doesn't allow advertising.
Of course, nothing is totally new in securities law.  Integration and advertising has been a problem for decades in another context.  What happens when a business files a registration statement to conduct a public offering, but then has to terminate the registered public offering?  Just by filing your registration statement with the SEC, you begin making a general solicitation, because the registration statement is a public document.  The actual sales effort that businesses and underwriters typically make increases the likelihood that any investors in a later private placement will have been attracted by the advertising in the IPO.  So does media coverage of your IPO.
But sometimes the IPO window closes, which simply means that investors in public markets think IPOs have become overpriced and too risky.  When that happens, the underwriters either cannot sell the deal or they cannot sell the deal at a price the business will accept.  So, the IPO is canceled before the SEC declares the registration statement effective.
Businesses sometimes need to do a private placement to raise part of the capital the business wanted to raise in the now defunct IPO.
When that happens, you encounter difficulties in trying to insulate the advertising and general solicitation that occurred during the IPO from the later private placement.  This was a much bigger issue for aborted IPO's several decades ago than it is today.  The SEC issued several no-action letters that placed severe limitations on the subsequent private placement, which was limited to institutional types of investors.  Small accredited investors were not eligible under these original SEC letters, because institutional investors have internal processes for minimizing the effect of the IPO on their investment that smaller investors don't usually have even if they have enough money to qualify as an accredited investor.
Then the SEC resolved these problems by issuing Rule 155.=
Rule 155 provides a bright line test for when abandoned public offerings and private offerings should be integrated.  Rule 155 also deals with integration issues related to abandoned private offerings that are followed by a registered public offering.  But we will focus on how Rule 155 deals with abandoned registered public offerings that are followed by a private offering, because the advertising issues are similar to an aborted Rule 506 (c) offering followed by another private placement offering using an exemption that does not allow advertising or general solocitation.  Rule 155 provides that the abandoned registered public offering and a subsequent private placement will not be integrated, if the issuer satisfies the following conditions:
·         No securities were sold in the registered public offering.
·         The issuer withdraws the registration statement it filed in the public offering.
·         The subsequent private offering does not begin until thirty (30) days after the effective date of the withdrawal of the registration statement
·         The issuer notifies each person to whom offers are made in the private offering that:  (i) the offering is not a registered offering, (ii) the securities being sold are "restricted securities" that cannot be re-sold, unless the transaction is registered or qualifies for an exemption from registration, (iii) purchasers do not have the protection of Section 11 of the Securities Act (which allows purchasers in registered public offerings to sue anyone who signed the registration statement (usually the CEO and CFO), all the members of the Board of Directors or general partners and all experts who consented to have their names included in the registration statement or certain related documents and all underwriters); and (iv) the issuer withdrew the earlier registration statement and the effective withdrawal date.
·         Any offering document used in the private placement discloses all material changes in the business and financial conditions that happened after the issuer filed the registration statement.
Rule 155 is a reasonable model for dealing with abandoned Rule 506 (c) offerings in which the business advertised. 
If a thirty-day waiting period is sufficient to insulate investors in a private placement from well publicized IPOs, it should be more than sufficient for a 506 (c) offering.  Most Rule 506 (c) offerings will involve much less advertising and media publicity than an IPO.  The thirty-day waiting period could begin when the business files a Form D with the SEC.
Hopefully, the SEC will resolve integration issues for Rule 506 (c) offerings by reducing the six-month waiting period in Rule 502 (a)'s safe harbor to thirty (30) days, if the business fully complied with Rule 506 (c) and applicable Form D reporting changes.
Obtaining this type of relief from the SECwould be especially important to small businesses that may rush into advertising without understanding that it may cut off their ability to raise capital from persons who are not accredited investors.
Beware of State Securities Laws
Advertising is subject to state anti-fraud laws even if you comply with all the accredited investor verification provisions of Rule 506 (c).
If you fail to satisfy the verification and other provisions of Rule 506 (c), the registration requirements and other provisions of state securities laws will not be pre-empted.  These state laws can raise substantial obstacles to your capital raising efforts.  Pre-emption of state laws is one reason why over 90% of private placements use Rule 506 of Regulation D.
Penalties for Non-Compliance
Rescission is the usual remedy if you don't have a Federal exemption from registration, or if you don't comply with state securities laws.  Rescission means that investors have the right to get their money back, plus interest.  If the business cannot pay the money back, officers and directors, investment bankers and others might have personal liability.
Plaintiffs' lawyers who show you don't have an exemption from registration can win the same damages that would be available if fraud had occurred.
You need an exemption from registration for both your offer and your sale.  But if you made an offer without an exemption, your only concern is that the SEC or state regulators will take the position that you violated securities laws.  You aren't likely to suffer any tangible penalty under the regulations, if these regulators believe you weren't trying to commit actual fraud, but you will probably incur substantial legal expenses dealing with the SEC and state regulators. 
If you didn't sell any securities in your offering, private investors won't have any action for rescission or other damages.  Therefore, if after advertising it looks like you cannot raise enough money from accredited investors and must take money from persons who are not accredited investors, you may be in a better legal position, if you terminate your Rule 506(c) offering without taking money from any investors and try to structure an offering that is not integrated with the aborted Rule 506(c) offering.

Articles in Private Placement Series
In July 2013 the SEC made the biggest changes to private placement capital raising rules since the SEC issued Regulation D more than three decades ago.
More than 90% of private securities offerings are affected by these changes.
The SEC's recent changes are a mixed blessing for businesses selling securities.  These changes include:
  • Prohibiting using Rule 506 if someone affiliated with your business or with your capital raising efforts has violated securities or other financial industry laws. 
  • Adding new Rule 506 (c), which allows you to advertise when you raise capital in a private placement.
  • Rule 506 (c) also requires you to take reasonable steps to independently verify that all people who buy securities are "accredited investors," if you advertise your offering.
Our articles in this series about SEC Rule 506 private placements help you decide how you can use these new rules to raise the capital your business needs by balancing three competing factors:
  • Advertising effectiveness
  • Budget
  • Securities law compliance 
You have to get all three right to successfully raise capital.
Here's a list of our articles that discuss the primary issues you will face when you try to balance these three objectives in your capital raising efforts:
  • Advertising Messages   Tweeting Your Way to Securities Fraud in 140 Characters: What Do you Say in SEC Rule 506 (c) Advertising in Private Placements?  How do you decide what you say in your advertising?  How do you say it?  What current SEC and state advertising rules can you use to guide your advertising decisions?  Can you combine effective sales messages with complying with securities laws?  Or is it an either or choice?  What's the point of advertising if securities laws prevent you from selling effectively? http://jimverdonikintersection.blogspot.com/2013/08/tweeting-your-way-to-securities-fraud.html
  • Choosing the Right Media for your Advertising. Don't Tweet when You Should Have LinkedIn: Choosing Your Advertising Media in SEC Rule 506 (c) Private Placements  How do you advertise within your budget?  How do you identify your "sweet spot" target investors and the right media to reach them?  What social media tools can you use?  How do you attract accredited investors who meet SEC criteria for making investments?  http://jimverdonikintersection.blogspot.com/2013/08/dont-tweet-when-you-should-have.html
  • Building your Sales and Legal Team.  Would You Let Your Lawyer Run Your Sales Department?  How Can You Build the Right Team for Advertising in SEC Rule 506 (c) Private Placements?  How do you build teams to help you do effective advertising while still complying with SEC and state anti-fraud rules?  What role should your sales team play?  What role should your lawyer play?  How do you choose a lawyer who can help you create effective advertising that also complies with securities laws. http://jimverdonikintersection.blogspot.com/2013/08/would-you-let-your-lawyer-run-your.html

  • Accredited Investor Verification.  Will SEC Rule 506 (c)'s Permission to Advertise Cure Your Capital Woes or is Its Accredited Investor Verification Requirement a Poison Pill?  If you want to advertise your securities offering, you must take reasonable steps to verify that everyone you sell to is an "accredited investor."  You can't just rely on the investor checking a box that tells you it is accredited.  How much checking is "reasonable"?  How do you qualify for the "safe harbor" the SEC included in Rule 506 (c)?  What happens if you don't obtain the right type of proof that the people you sell securities to are "accredited investors?"  Why will some investors refuse to comply with your verification requests?  What can you do to reassure investors about privacy issues and make the verification process more convenient for investors?   http://jimverdonikintersection.blogspot.com/2013/07/sec-rule-506-c-sec-throws-new.html
  • Beware of SEC Integration Rules:  SEC RULE 506 (c) Integration Pitfalls: Don't Use the SEC's New Advertising and Solicitation Private Placement Rule to Saw Off the Limb You are Sitting On  Why should you look before you leap into advertising?  What integration and related pitfalls does Rule 506 (c) create for businesses that choose to advertise or engage in general solicitations?  How do you sell securities to people who are not accredited investors under another SEC private placement exemption, if your advertising doesn't attract enough accredited investors to finance your business?  http://jimverdonikintersection.blogspot.com/2013_07_01_archive.html
·         Getting Caught : How Will the SEC Know I'm Advertising in a Rule 506 (c) Private Placement?   How will the SEC know about your advertising?  Why isn't it a defense that everyone else is breaking the rules?  How do you deal with the interim period when people are figuring out what the new rules let you do and don't let you do? http://jimverdonikintersection.blogspot.com/2013/09/how-will-sec-know-im-advertising-in.html

·         Bad Actors:  SEC's Bad Actor Rule: When You Lie Down with Dogs Expect to Get Fleas  To use Rule 506 (with or without advertising) you have to verify that a long list of people who are affiliated with your business or with selling your securities offering haven't violated securities or other financial industry laws.  How do you make sure the SEC's Bad Actor Prohibition for Rule 506 private placements from cut off your ability to raise capital? http://jimverdonikintersection.blogspot.com/2013/07/secs-bad-actor-rule-when-you-lie-down.html

    If you would like to learn more about learning how to grow your business or other issues important to your success, you can reach me at JFV@WardandSmith.com or JimV@eLearnSuccess.com. Or you can check out my eLearning course at http://www.elearnsuccess.com/start.aspx?menuid=3075 or http://www.youtube.com/user/eLearnSuccess or you can purchase my books at http://www.amazon.com/Jim-Verdonik/e/B0040GUBRW



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