You might be surprised to learn how broadly the SEC and courts have interpreted terms like "offer" and "general solicitation".[1] An offer is any "attempt ... to dispose of ... a security ... for value".[2] The SEC "has confirmed that uses of ... unrestricted websites ... constitute general solicitation."[3]
Had you done this last Friday, you would be hard-pressed to find an experienced securities lawyer who would tell you that the letter posted on your web site does not violate US laws. The good news is that due to regulations that went into effect on Monday, you have not yet violated US securities laws. However, because you've engaged in general solicitation, you are now subject to, among other things, additional investor verification requirements before you actually sell securities to any US investor.[4] If compliance with US laws is or will be important to your business, be sure you get help from a very experienced securities lawyer with the rest of your fundraising process. There are many traps for the unwary.
[1] Some illustrations:
SEC v. Arvida Corp., 169 F.Supp. 211
Chris-Craft industries, inc. v. Bangor Punta Corp. 426 F.2d 569 (1970)
SEC v. Commercial Inv. & Dev. Corp. of Florida, 373 F.Supp. 1153 (1974)
SEC v. Thomas D. Kienlen Corp. 755 F.Supp. 936
Diskin v. Lomasney & Co., 452 F.2d 871
Hocking v. Dubois, 885 F.2d 1449
Had you done this last Friday, you would be hard-pressed to find an experienced securities lawyer who would tell you that the letter posted on your web site does not violate US laws. The good news is that due to regulations that went into effect on Monday, you have not yet violated US securities laws. However, because you've engaged in general solicitation, you are now subject to, among other things, additional investor verification requirements before you actually sell securities to any US investor.[4] If compliance with US laws is or will be important to your business, be sure you get help from a very experienced securities lawyer with the rest of your fundraising process. There are many traps for the unwary.
[1] Some illustrations: SEC v. Arvida Corp., 169 F.Supp. 211 Chris-Craft industries, inc. v. Bangor Punta Corp. 426 F.2d 569 (1970) SEC v. Commercial Inv. & Dev. Corp. of Florida, 373 F.Supp. 1153 (1974) SEC v. Thomas D. Kienlen Corp. 755 F.Supp. 936 Diskin v. Lomasney & Co., 452 F.2d 871 Hocking v. Dubois, 885 F.2d 1449
[2] 15 USC ยง 77b
[3] SEC Release No. 33-9415
[4] Good summary written by Naval Ravikant and Kevin Laws at http://techcrunch.com/2013/09/21/why-you-need-to-pay-attenti...