There are definitely pros and cons with both HR 2930 and 2940. Having been in the position of a cash-strapped start-up trying to raise money, I can see the huge benefit of the changes for raising cash from small investors with intermediaries (basically a “finder”) and advertising rules. However, the lack of disclosure requirements could allow for fraud on potential investors and not enough oversight.
I am a little surprised I don’t see more posts regarding these from other corporate, startup, or securities lawyers. Here is a link to a good discussion on HR 2930 by the Securities Law Prof Blog.
Given that it appears that both HR 2930 and 2940 may pass the US Senate and be signed by the president and the recent recommendation by the Advisory Committee on Small and Emerging Companies for the SEC to make similar changes to SEC rules for 506 Reg D private placements, it appears these changes may take effect in the next several months. It may have some negative consequences on investors, but I think it will help with small startup companies fund raising abilities. There will be some work for corporate and securities lawyers to interpret and help companies implement these changes in the near future.
Stay tuned, I will try to keep track of the progress of these bills and provide updates as available on my blogs. barsnesscohen.blogspot.com and chrisbarsness.tumblr.com Twitter: @BarsnessLaw | www.siliconvalleystartupattorney.com