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 wanted to say something in a meeting
or on a conference call, but by the time you get other people's attention, you
didn't know what to say?
Embarrassing isn't it?
Clients have asked me for decades:
- "Why can't
I advertise in my private placement?"
- "How am I supposed to raise capital, if I don't already know investors?"
Be careful what you wish for.
New SEC Rule 506 (c) allows you to advertise for
accredited investors in a private placement, if you meet the accredited investor
verification requirements of Rule 506 (c).
So, I ask you:
- What do you
want to say?
- How will
you say it?
- Will you
use traditional advertising?
- Or will you
rely primarily on social media?
- How does your choice of advertising media affect what you say and how you say it?
Of course, social media would be dead if people
really were at a loss for words. We
never seem to run out of words. But any
sampling of social media will turn up clear examples of people's words getting
far out in front of their brains.
We often warn teenagers to think before they say
something in social media, because they are creating a permanent record that
people will use to judge them. Their
career might be hurt by something they said when they were 17 years old, or when
they are frustrated with their boss or are just exercising their right to
pursue happiness (a/k/a partying).
Sometimes social media mistakes are OK. Your world doesn't always end. You might be embarrassed for a day, but then
you and everyone else moves on to more pressing matters. Your friends have incentives to forgive and
forget, because they know that they might make a similar mistake tomorrow.
But before you begin to raise capital through the
media, ask yourself:
- Will the SEC and state securities regulators accept your mistakes like forgiving friends do?
Or
- Will the SEC and state securities regulators scrutinize and penalize your mistakes like a prospective employer would?
Why should you care about what the SEC and state
securities regulators think?
You won't be advertising your private placement to
please the SEC. You advertise to raise
capital. But the SEC and state
securities regulators carry big sticks.
They can make it impossible for you to raise capital. They can kill your business. If they think you are really trying to commit
fraud instead of just making an honest mistake, they can even put you in
jail.
So, we'll talk about how you do an effective job of
selling while avoiding the biggest securities pitfalls.
Scope
of this Article
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.
This article explores:
- How do you
decide what do you want to say in your advertisements?
- How do you
say it generate sales?
- How do you
say it to comply with securities laws?
- Can you
combine effective selling with securities law compliance?
- Or do you have to choose one or the other?
See the end of this article for links to
other articles about these Rule 506 changes.
Advertising
and SEC Anti-Fraud Rules – Don't let 140 Characters Tweet you to Jail
If you decide you are
going to advertise to sell securities, you have to do two things.
- Comply
with the technical requirements of new SEC Rule 506 (c).
- Adapt your advertising to fit into the basic principles of securities laws.
We talk about the
technical requirements of Rule 506 (c) in the other articles we referred to
above.
Back
to the Basics – Three Roads to Fraud
Let's begin trying to understand how to avoid
committing securities fraud in your advertising by reviewing the basic definition of securities fraud. Here's the full text of SEC Rule 10b-5:
"It shall be unlawful for any person, directly or indirectly, by the use
of any means or instrumentality of interstate commerce, or of the mails or of
any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state
a material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which operates
or would operate as a fraud or deceit upon any person,
in connection with the purchase or sale of any security."
Securities lawyers often focus on the
material facts part of the Rule, but the other elements of Rule 10b-5 may be
important to deciding whether certain types of social media advertising comply
with securities laws. We'll discuss
these types of issues below when we consider state enforcement actions.
Telling the Whole Truth
The primary thing to
remember about Federal and state securities laws are a few very simple
principles about fraud are at the core of hundreds of securities rules:
- Principle
1 - Fraud is bad.
- Principle
2 – Principle 1 never changes.
So, what is fraud?
- Principle
3 - Tell the truth.
- Principle
4 – Tell the whole truth.
Most people get the "tell
the truth" part right. That's
because most securities violations aren't made by people who are trying to
commit fraud. So, most people don't
lie. But not lying is the easy
part. Telling the "whole truth"
is where people most often make mistakes.
It's easy to leave important stuff out.
What shouldn't you
leave out?
You have to tell
investors all material facts.
What's a material
fact?
Like beauty, material
facts are in the eye of the beholder.
The beholder is your investor. A
material fact is anything that would likely influence a reasonable investor's
decision to either invest or not invest in your business.
What happens if you
tell investors all the material facts, but they don't understand them?
You have an
obligation to give investors the tools to understand the material facts you
tell them by also telling them all the material facts that are necessary to
avoid misleading investors.
What does that mean?
Think of it this
way. Suppose you go to the library this
afternoon, but after you leave the library you hang out with your friends in a
bar the rest of the afternoon. What if your
significant other asks you: "Where
did you go this afternoon?" It
would be telling the truth, if you say:
"I went to the library."
But that's not the
whole truth.
Now what if you said: "I went to the library and then I went
downtown." That would be adding a
little more of the whole truth. If your
spouse wanted to know how far you drove that afternoon to determine how much
gas is left in your car, it might even qualify as the whole truth. But if your spouse wanted to know what you
were doing that day, she would probably think that going to the bar to hang out
with your friends is an important fact.
Investors are
entitled to evaluate the total mix of information, not just bits of information
in isolation. If there is a substantial
likelihood that a reasonable investor would think any piece of information
significantly alters the “total mix” of information available, that piece of information
is a material fact. If you don't
tell it to the investor, you have committed securities fraud.
This little story gives you a map
to avoid getting lost in the swamp of securities fraud. But this story doesn't tell you how you
actually raise capital. How do you
actually sell securities?
Telling Compelling Stories is the Key to Sales
My story about the
library and the bar also illustrate another point that is critically important
to selling anything.
To sell anything, you have
to tell a story that people will care about:
- What good
is advertising, if no one will pay attention to it?
- What good
is advertising, if people tune out after seven seconds?
- What good is advertising, if people say "So what!" after they listen to it?
People will only pay attention to your
advertising, if you tell a compelling story.
That's because you have lots of
competition for their attention.
Humans have thousands of years of
experience telling stories and listening to the stories other people tell. People try to get us to pay attention to hundreds
of stories each day. To survive in the
story-rich environment we all live in, we have become experts at screening out
stories that don't interest us.
Most people operate on the seven seconds or out rule. Either you catch their interest in the first
seven seconds or they move on to something else.
That's true whether the media is print,
audio or video, paper, analogue or digital.
The first words or images or the first seven seconds are your doorway
to:
·
Raising
the capital you need to grow your business.
or
·
The
trash bin of history.
If you fail in your mission to capture
people's attention during that first seven seconds, you are wasting your
advertising dollars. More importantly,
you are wasting opportunities. Every
accredited investor who sees your advertisement and then tunes out is a lost
opportunity. Lost opportunities destroy
businesses.
This creates a challenge, if you use
advertising to sell securities.
Advertising Materials and Social Media
Let's think about
fraud in light of the type of advertising that businesses of different sizes
are likely to conduct.
The Internet and
social media will become the battleground most small businesses use to win the
hearts and minds of investors. We can
expect that many of the new Rule 506 (c) advertisements won't look and feel
like the advertisements large public companies have traditionally done for
their public securities offerings.
The social media
environment is too unorganized and chaotic to just download old securities
advertisements into social media. Cold
advertisements won't be noticed.
Why?
Because most
traditional securities advertisements are BORING. They don't pass the seven seconds test.
Advertising has
changed a lot faster than securities laws during the past several decades. We should expect businesses will try to sell
securities by using every Internet and social media tool people use to sell other
products and services (like travel, music and porn).
Although the media
and tools will be new, both state and Federal securities laws will apply the
normal fraud tests to the content of advertising materials.
What do think will
happen when social media sales techniques collide with traditional anti-fraud
provisions of securities laws?
What will social
media securities sales campaigns look like?
It's impossible to
predict every attributes of future sales campaigns, but it's useful to remember
a fundamental characteristic of social media is that it's an ongoing and free
flowing conversation. Unlike traditional
advertising, it's not a one way street.
Users create part of the conversation.
This principle will account for many of the differences between how you
use social media to sell securities vs. how you use traditional
advertising.
- How
much information can you include in your Tweets? Your advertising can't include all the material
information about your business.
- Creating
an integrated disclosure campaign that follows up short advertisements
with full disclosure to the people your advertisements solicit will be a
critical part of your compliance strategy.
- Sales
and follow-up materials don't have to duplicate one another, but effective
selling usually requires each message to reinforce earlier communications. But it's critically important for
securities compliance purposes that one message doesn't contradict what
you say in another message. When
you piece it all together, it has to both tell the whole truth and be
internally consistent. That means
isolated efforts to sell your deal can get you into trouble. You should plan all your sales and
disclosure messages as a single integrated campaign where each part is
designed to fit with all the other pieces.
- Videos and other social media tools by nature generally appeal to emotion. In theory, you can compensate for that by later delivering a more rational document. But in a law suit, plaintiffs' lawyers will use your videos and other sales tools against you to convince juries you used trickery to commit fraud. So, each of your sales materials needs to pass a smell test. When considered by itself an advertisement shouldn't smell like fraud and trickery. That can create trouble for you even if you later communicate the whole truth.
Virtually any of the tricks you commonly
see in advertising to sell products that causes people to make emotional
purchase decisions is frowned upon in the world of securities regulators. Let's look at advertising in the auto
industry to put these guidelines into perspective:
- Modern auto
sales are based on convincing you that you will die alone without the
companionship of members of the opposite sex if you don't buy this sexy
car. Another approach is that you're
a bad parent if you don't buy a kid friendly car. Green cars appeal to your sense of being
a good steward for the planet. All
these are emotional pitches based on short stories in which the product
being sold is only playing a cameo role .
In extreme examples, you sometimes see a commercial and wonder what
product it was trying to sell.
- At the other extreme, Henry Ford sold a basic Model T car 100 years ago. The sales pitch was simple: it's cheap, it's easy to fix and it will get you where you want to go better than a horse.
Guess which type of advertising
securities regulators want you to use.
But we have already discussed that the
art of selling requires you to tell a
story that creates an emotional connection.
So, the art of selling securities requires you to mix your material
facts into a compelling story.
Examples
of Current Advertising Rules
Advertising securities wasn't invented
yesterday. It's a regular practice in
registered public offerings. So, it's
not surprising that the SEC and state securities regulators have already issued
rules to regulate advertising in public offerings.
Let's look at some of these rules to get a feel for
current advertising dos and don'ts we can apply to advertising in private
placements.
SEC
Rules for Advertising Content
A fundamental principle of Federal
securities law advertising rules is that you are supposed to sell securities
with the information you include in your Prospectus that is part of the
registration statement you file with the SEC in your registered public
offering. You have special liability for
both the things you say in a Prospectus and the things you should have said in
the Prospectus but didn't say.
The SEC doesn't want you to use
information that isn't in your registration statement's Prospectus to sell
securities and thereby avoid the protections investors are supposed to receive
in registered public offerings.
That's why SEC rules about advertising
in public offerings try to cause you to drive people to read the Prospectus
that is part of the registration statement you file with the SEC. SEC rules about the content of advertising
focus on identifying who is selling the securities, the type of securities
being sold, how much money you are trying to raise and where people can find
out more information. SEC Rule 133
defines what an offer is and Rules 134, 134a, 134b, 135, 135a, 135b, 135c, 135e
and 164 generally describe permitted advertising content and other permitted
notices outside a Prospectus. SEC Rules
137, 138, 139 and 139a define when a broker's report about a business that is
selling securities is not part of the effort to offer and sell securities.
These rules should serve as your
starting point for determining what you can safely say in advertising your
private placement under Rule 506 (c).
But in your private placement, you have no Prospectus. There are no special liability rules for what
you say or don't say in your private placement memorandum vs. what you say or
don't say in your advertising. What you
say in different documents you use in a private placement is all judged by the
same rules. That's one reason why
private placement advertising will probably feature substantially different
content than advertising materials used in registered public offerings.
Separate Your Commercial Product Sales Messages
from Your Investment Messages
Try to carefully
separate the commercial advertising and promotions you use to sell products to
customers from your advertising to sell securities. Your sales and marketing team may routinely
make aggressive performance claims to sell your products and services.
Puffing is an
expected part of commercial sales.
That's because we generally have a philosophy of "Let the buyer
beware." Consumers are supposed to
be skeptical and protect themselves by not believing everything a seller says
about its products.
But the reverse is
true when you sell securities. The
primary basis of securities laws is "Let the seller beware." Sellers have an obligation to tell the whole
truth. Investors are entitled to believe
every word you say when you sell securities.
So, exaggerating how well your products perform or saying that no
competitor's product can do what your product does can constitute securities
fraud.
If you use the
Internet and social media indiscriminately to generate both product sales and
securities sales, it will be difficult to convince anyone that your commercial
puffery isn't securities fraud. Try to make
clear distinctions between the two. You
should particularly avoid the following practices that signal to the SEC that
you are using your product advertising to sell securities:
- Changing
your commercial sales messages to more aggressively tout your product
compared to competitors immediately before or during the time you conduct
your securities offering.
- Increasing
your advertising budget substantially when you are selling securities.
- Placing your product ads in media where investors are more likely to see it than are customers.
All of these
practices are warning signs that the SEC might use to determine that your
product advertisements were part of your efforts to sell securities.
Large public
companies have dealt with similar issues for many years. Small businesses with smaller budgets and
less experience will have much greater difficulty navigating this minefield to
find safe pathways for selling products and for selling securities. The fewer times these paths cross one another
the less securities fraud risk you run.
When you establish a
budget for advertising and general solicitation, you will probably pay more to
decide what you say and how you say it than what you will pay different media
outlets per view or per click.
Temptations to push the envelope on your
advertising will be everywhere. You will
begin to see really "cool" stuff other business are using to sell
securities through social media in the near future. The lawsuits that decide the differences
between what is "cool" and what is fraudulent probably won't happen
for at least several years. It will
probably take that long for most businesses that raise capital to crash and
burn.
So, don't assume that the advertising
practices you see other businesses are doing comply with securities laws.
Liability
for What Other People Say
Another relevant Federal securities
fraud principle that is that you can be liable for fraud based on what other
people say about your business.
Let's talk about several examples.
Analysts
and Experts.
If you give investors positive
statements that other people have said about you or your products, you can be
deemed to have "adopted" these statements that other people have
made. This can happen when you quote "experts"
or if you tell investors about overly optimistic securities analyst reports
about your business or industry. There
is a body of law that determines when you are responsible for what analysts say
about you and when you are not.
Blogger
and Customer Product Reviews
When businesses use social media to sell
products or services, they often use statements made by third parties as a
major part of their sales effort. They
plant phony customer reviews on websites or they reward bloggers for giving
positive reviews. Be aware that the SEC
would frown on selling securities using many of these practices that businesses
often use to sell products and services.
For example, if you plant or pay for third party statements, it may be
misleading if you don't also disclose your role in causing these statements to
be made.
Social
Media "Conversation"
So far, we have just considered the
obvious – that if you plant false endorsements it might be fraud. You can control this to some extent. But the social media conversation often isn't
limited to communications between two people.
Multiple people jump in. If you
encourage multiple people to share their views about your business to the
world, you could have liability for what they say about you, if you know they
are saying something that is false or misleading. Consider ways you can reduce that risk. General disclaimers about not being
responsible for the views expressed by others may be helpful, but they might
not be sufficient to fully protect you.
Correcting false or misleading statements others make may protect you
from liability for that particular statement, but it might also create the
impression that unless you correct a statement its true. You could create a duty to correct everything
if you publicly correct some statements.
Links
Under some circumstances you can have
liability for statements made in materials to which your materials refer or
link. In a highly linked world, think
about what you are linking to in all your communications. Do you really want to take responsibility for
everything you link to?
State
Securities Laws Regulate Advertising Content
State securities laws overlap SEC
rules. But it's useful to understand
that many states concentrate their enforcement efforts on things the SEC
doesn't spend as much time doing. The SEC
devotes so much of its resources to policing large public companies, public
trading markets and the investment banking and mutual funds industries. That leaves a lot of potential "bad
guys," who use high pressure fraudulent schemes that focus on separating
small and medium size investors from their money.
State securities regulators often focus
their resources on common fraudulent schemes that often use the same tried and
true misleading and high pressure sales techniques. These schemes often involve real estate, oil
drilling, commodities, viatical contracts and other alternative investments.
You might be a perfectly legitimate
business, but if your advertising makes you look and sound like one of the bad
guys, state securities regulators will probably single you out of the crowd for
special investigation.
We don't have room to summarize the rules
of 50 states here. So, I'll summarize
the fraud and advertising rules in my home state. Here's what North Carolina rules say are
deceptive or misleading practices:
·
Misleading
Comparisons. Comparison charts or graphs
showing a distorted, unfair or unrealistic relationship between the issuer's
past performance, progress or success and that of another company, business,
industry or investment media. So, saying that you have more revenue than Google
did at a similar stage might be a fraudulent advertisement even if its true.
·
Unequal
Presentation of Adverse and Favorable Disclosures. Lay-out, format, size, kind and color of type
used so as to attract attention to favorable or incomplete portions of the
advertising matter, or to minimize less favorable, modified or modifying
portions necessary to make the entire advertisement a fair and truthful
representation. You can't shout the good
news in headlines and bury the bad news in small type in the back.
·
Disguising
Opinions as Facts. Statements or
representations which predict future profit, success, appreciation, performance
or otherwise relate to the merit or potential of the securities unless such
statements or representations clearly indicate that they represent solely the
opinion of the publisher thereof. To
avoid problems clearly identify opinions and "forward looking statements."
Evaluate whether you have a rational
basis for including these options and projections. Tell investors where they can find
explanations of why your business' actual performance might be different from
these opinions and projections.
·
Generalizations
Not Supported by Facts. Generalizations,
generalized conclusions, opinions, representations and general statements based
upon a particular set of facts and circumstances, unless those facts and
circumstances are stated and modified or explained by such additional facts or
circumstances as are necessary to make the entire advertisement a full, fair,
and truthful representation. This is
another way of saying that you should state the assumptions on which your
predictions are based. Give investors
the tools to evaluate whether your assumptions are reasonable and what will
happen if they are not.
·
Overstating
Potential Gains. Sales kits or film
clips, displays or exposures, which, alone or by sequence and progressive
compilation, tend to present an accumulative or composite picture or impression
of certain, or exaggerated potential, profit, safety, return or assured or
extraordinary investment opportunity or similar benefit to the prospective
purchaser. Repeat after Me: "Nothing in life is guaranteed." Avoid saying things like guaranteed income or minimum
returns on investment. $0 is always the
minimum return you can guaranty. Don't
refer to past periods of high profits to predict future high profits.
·
Excessive
Optimism. Distribution of any
non-factual or inaccurate data or material by words, pictures, charts, graphs,
or otherwise, based on conjectural, unfounded, extravagant, or flamboyant
claims, assertions, predictions or excessive optimism. The effects of graphic images are difficult
to overcome with written disclaimers. If
you distribute graphs showing ever increasing profits, securities
administrators will be skeptical that footnotes urging caution are effective
disclosures.
·
Bonus
Incentives. Any package or bonus
deal, prize, gift, gimmick or similar inducement, combined with or dependent
upon the sale of some other product, contract or service, unless such unit or
combination has been fully disclosed and specifically described and identified
in the application as the security being offered. Don't promise a free puppy to people who buy
your stock. Likewise, securities
regulators will be skeptical about promising discounts to the first hundred
buyers.
Stop Supplying Outdated Information
Businesses often
start offerings with one set of projections and reality forces them to change
their projections. In other cases, your
personnel change or you drop planned features from your product or you change
product pricing or you change your target market segment.
Changes aren't
evidence of fraud. Change is a fact of
life in business. Just make sure you
update your disclosures to reflect these changes. But if you continually have to update
projections to reflect changes, you should consider whether the changes are a
warning sign that you haven't investing enough effort to vet your projections.
·
If
you have an investment solicitation on your website, either update your message
or take it down.
·
If
you advertise on other websites, either update or cancel your advertising
contract.
·
You
may need to call specific attention to changes you have made from earlier
disclosures instead of hoping investors won't notice the downgrade differences.
That
still sounds simple. All you have to do
is to undo what you were doing.
But
social media often takes on a life of its own.
That's one reason people like it.
It's cheap, because once you initiate something, it can keep moving
through social media without you doing anything to keep it going. If your advertising goes viral, it's a very
cheap way to advertise. But the low cost
often doesn't include a turn off switch or button. Sometimes you can't turn it off.
So,
how does an offer embedded in a viral video affect your ability to turn off
your offering?
Will
anyone believe you didn't plan to use it to continue to make offers while
pretending not to?
Soliciting
Offers to Buy
Playing
lawyer is dangerous. Some people know
just enough law to get themselves into trouble.
They may have heard that unless you specify a price you haven't made a
legal contract offer that someone can accept.
Don't
mix up contract law with securities laws.
The SEC considers soliciting someone to make an offer to buy your
securities to be the same as you offering to sell securities. So, your advertising can be an offer to sell
even if it doesn't specify the price or other material terms.
Beware of Multiple State Securities Laws
Rule 506 exempts you
from pre-clearance filings and the registration requirements of state laws, but
state anti-fraud laws still apply to your offering. Your advertising may violate state securities
laws even if your advertising complies with Federal laws.
But which state laws
apply to your offering? The Internet and
other advertising media are available in all 50 states. How do you check fifty state laws before you
advertise? That could be expensive and
time consuming.
Be specific in your
advertising materials about where you are offering and residents of which
states can purchase securities in your offering. For example: "This offer is valid only
for investors who live in the following states _____. Residents of other states may not participate
in this offering."
But, of course,
these disclaimers won't help you, if you ignore them and sell to whoever contacts
you. Do you have the discipline to turn
down investments from states you initially excluded?
Can you change your
mind about where you are offering and take steps to comply with state laws
after people from excluded states contact you?
If you expand your
offering after investors in other states contact you and you are using SEC Rule
506 that preempts many state laws, your sales may be legal. But if you are not using Rule 506, you may
have violated the pre-sale notice and advertising rules of states you add to
your offering.
Record
Keeping
Keep a record of all your advertising.
The burden will be on you to prove that
your advertising didn't violate the rules.
That's why it's important to keep a record of all your advertising. It's important to be able to document:
- What you
said.
- How you
said it.
- Who saw it.
- When you
started saying it.
- When you
stopped saying it.
- Whether you
have ever said anything contrary.
- If your advertising is too short to avoid omitting material facts, how you later delivered the material facts and who you delivered it to.
How long should you retain records?
Check applicable statutes of limitation
for how long the SEC or Department of Justice can bring actions against you and
how long investors can seek damages or state securities regulators can assert
you should have complied with state securities laws, because you failed in your
attempt to qualify for the 506(c) exemption.
Penalties for Non-Compliance
If you don't comply
with Federal or state securities laws, the usual remedy is rescission. That 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.
If you use advertising
that convinces securities regulators you intended to commit fraud, you might
face criminal prosecution.
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
- Identity Crisis at the SEC: Does
Filing Your Private Placement Tweets with the SEC make Sense?
What road blocks to effective advertising in private
placements is the SEC erecting? Why
are these blocking efforts doomed to fail? http://jimverdonikintersection.blogspot.com/2013/09/does-filing-your-private-placement.html
- Government Bouncer at the
Capitalist Club: SEC RULE 506 (c): Who is Allowed to Be a Capitalist? Why is the Government using Rule 506 (c)
to decide who is allowed to be a capitalist? Do you have what it takes to get past
the Government bouncer standing in your way at the door to the capitalist
club? Why can't you be a capitalist
too? http://jimverdonikintersection.blogspot.com/2013_09_01_archive.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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