Investment Portals Addressed in SEC Staff Guidance Under JOBS Act; No-Action Letters Also Issued

May 14, 2013

Technology has spawned the formation of new internet-based marketplaces for illiquid and restricted securities. In most instances, these markets are operated by entities registered with the U.S. Securities and Exchange Commission (“SEC”) as broker-dealers under the Securities Exchange Act of 1934 (“Exchange Act”). Last year, the JOBS Act1 expanded opportunities for companies to use technology to raise capital more efficiently by, among other things, relaxing the limitations on solicitation of accredited investors in Regulation D under the Securities Act of 1933 (“Securities Act”). The JOBS Act also created a new exception from broker-dealer registration to permit entities to create “funding portals” for the purpose of introducing new investment opportunities to accredited investors. In recent months, the staff of the SEC’s Division of Trading and Markets (“Staff”) has issued FAQs as well as two no-action letters that facilitate the development of these new portals. This OnPoint discusses some of the recent developments in the area.

Read “Investment Portals Addressed in SEC Staff Guidance Under JOBS Act; No-Action Letters Also Issued.”