Trust, And Verify

In considering the relaxation of the prohibition against general solicitation and general advertising that was incorporated into the JOBS Act, Congressional attention seemed to focus on some quid pro quo arrangement that demands verification of accredited investor status. This leads us to wonder why it takes a "trade" of this sort to justify removing the ban on general solicitation, which was deemed anachronistic long before the JOBS Act was contemplated. For at least the last decade, practitioners have been urging the SEC to consider whether the prohibition against general solicitation made sense given advances in communications. In fact, the deregulation of "offers" had been proposed as far back as the late 80s. Throughout this period, there have been few studies regarding any fraud or evidence that investors misrepresent their status as accredited investors in order to gain access to certain investment opportunities, or that this type of conduct might be so prevalent