Friday, November 16, 2012

Raising Money: JOBS Act - Securities Act Revisions

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Although CrowdFunding Incubator does not involve itself in raising funds for its Project Sponsors (clients) through securities offerings at present in order to simplify the crowdfunding process and to minimize the legal costs associated with any type of regulatory compliance (especially where this may concern the SEC and state securities authorities), we will become affiliated with some expert and experienced securities broker-dealers at some point in the near future to be able to raise subsequent rounds of financing for certain of our clients where this may be appropriate. We'll keep you up to date through any of the following blogs:

The InfoSphere Business Alerts And Intelligence Blog
The CrowdFunding Incubator (CFI) Blog
The Crowd Funding RSS Feeds Blog, or
The Daily Burst Of Brilliance Blog

In the interim, entertainment lawyer and prolific writer Gordon Firemark, Esq., whom we at CrowdFunding Incubator LLC are proud to call our friend and colleague, has provided a fabulous capsule update regarding the status of JOBS Act revisions (as they are proposed today) to securities offerings. A excerpt from Gordon's newsletter follows:

Raising capital

Last April, Congress passed, and President Obama signed into law, the JOBS Act.  One important component of that act loosened restrictions on the way film and theatre producers companies can obtain financing through private offerings under Rule 506.  

This has been the preferred approach to independent financing for films and theatre projects for some time, largely due to simplified State “Blue Sky” procedures. Now, things are getting even better for those seeking investment under this system.

The JOBS Act requires the SEC to implement rule changes to allow  previously prohibited general solicitation (i.e., public advertising) of offerings, provided the offering is made only to Accredited Investors (investors who satisfy certain wealth, income and investment sophistication standards).

These changes represent the most significant change to the Regulation D private placement system in several years.  This will result in far more effective promotion of Regulation D 506 offerings to investors.  Under the new rules, issuers can create what is essentially a quasi-public offering allowing general advertising and solicitation,  while  keeping the benefits of a true private placement.  

The SEC is expected to finalize the rule changes within the next 90 days.  For now, I’m counseling clients to treat their offerings as  ”Rule 506 Accredited Investor Only”  to  allow us to use the new 506c exemption  once it is available.

If you’re considering financing a film or theatre project, it makes sense to plan for the implementation of the new rules, and if appropriate, take advantage of the option for general solicitation.  But, before doing so, it’s important to consult with a qualified, experienced entertainment lawyer.

For further information regarding this article, you may either contact me as set forth in the footer below, or contact attorney Firemark at this website at He would likely be the appropriate expert to consult with, especially if you have an artistic, creative or entertainment centered "indie" venture.

Thank you, as always for reading me and retweeting (RT) me.

Douglas E. Castle

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