Relaxing the Ban: It's Time to Allow General Solicitation and Advertising in Exempt Offerings

Abstract:     
The article explores the ban on general solicitation and advertising in private placements of securities. The article finds that the ban negatively impacts the ability of emerging companies to raise critical start-up and early-stage private equity capital. The article asserts that the ban is not the result of strong ideology but from the statutory distinction between public offerings and private or limited offerings entrenched by overlapping federal and state securities regulations. In light of this finding and the importance of emerging companies to the U.S. economy, the article argues that the ban should be relaxed.

Finally, the article suggests specific regulatory reforms.

Number of Pages in PDF File: 50

Keywords: general solicitation, general advertising, private offering, private placement, emerging company, angel financing

JEL Classification: K22, K23

Accepted Paper Series