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SEC Lifts Advertising Ban for Fund Seekers
By: Dwayne W. Waite Jr.
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One of the biggest claims that the United States holds is that it is business-friendly. It claims that anyone can rise across social and economic statuses, climb the ladder to wherever that person wants to go. When people needed resources, America was the place to find them.

And the Securities and Exchange Commission just made finding resources easier.

The SEC recently lifted an 80-year advertising ban that prohibited private companies from using "general solicitation" to tell private investors that they were selling shares of equity. This is good news for startups and hedge funds that do not have the connections to find big-time investors.

The ban, which was started in the Great Depression, is a part of the JOBS Act.

The SEC isn't letting anyone openly invest in these private companies. No, the new rules require that these "accredited investors" have a personal net worth of at least $1 million dollars or have made an income of $200,000 a year for several years. So although private companies can openly advertise, those who are able to answer are protected by this financial barrier.

Is this a good move or a bad move? It depends on the perspective. In the source article, one person believes that this will be a tremendous boost to startups and investing groups. Another thinks that this opens the door for scams, and people must be diligent or else they will be taken advantage of, and the market for this will slowly erode because of the bad behavior.

It is interesting to us that certain things are allowed to be advertised, while others are not. Some things are championed by the "let the market decide" crowd, and others are not. If we are truly a free enterprise system, we should be thankful that another avenue for parties to announce that they are open for business and partnership opportunities has opened. We should rely on the market and the advertising to weed out the bad apples, and that the good investment opportunities will prevail.

It's good to see that startups got another way to make their voices a little louder.


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About the Author
Dwayne W. Waite Jr. is partner and principal at JDW: The Charlotte Agency, a marketing and advertising shop in Charlotte, NC. He enjoys consumer behavior, economics, and football.
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