Daniel Gorfine
Adjunct Fellow; Vice President, External Affairs and Associate General Counsel, OnDeck
Capital Access and Capital Markets and Demographics and FinTech and Global Economy and Public Policy
Daniel Gorfine is an adjunct fellow at the Milken Institute and vice president, external affairs and associate general counsel at OnDeck, a technology-based company focused on transforming small business lending.
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JOBS Act private offerings provisions aEUR~go liveaEUR(TM) aEUR" context and analysis

By: Daniel Gorfine
September 23, 2013

Today, the SEC officially implemented Title II of the JOBS Act by lifting a decades-old ban on the mass marketing of private securities offerings aEUR" meaning those securities not formally registered with the SEC. In addition to companies and investment funds being able to engage wealthy friends and family, it will now be possible for them to advertise private securities to the general public via the Internet or social media platforms, such as Facebook or Twitter aEUR" so long as the ultimate buyers are verified as being qualified institutions or one of the countryaEUR(TM)s approximately 8.7 million aEURoeaccreditedaEUR? investors (those of sufficient wealth or income presumed by the SEC to be sophisticated when presented with a private offering). Already, one California-based company, TechShop, has publicly announced that it is seeking to raise $60 million.

Back in February, we expressed our view that these rule changes would affect how startups and small companies aEURoeraise money, as they increasingly shun the highly regulated, costly and volatile public markets in favor of now deeper and more efficient private markets.aEUR? We went on to explain further the interplay between public and private markets, and potential investment risks for novice accredited investors who may be drawn to private offerings for the first time.

In July, when the SEC voted to lift the general solicitation ban at the same time it opted to propose, but not adopt, a number of additional disclosure requirements and regulations, we shared our perspective, that the stage was set for aEURoea crucial experiment of whether private capital markets are able to police themselves and ensure market integrity.aEUR? We suggested that if the market experienced a number of aEURoeinvestment scams, abuses, and boiler rooms this will likely lead to significant new regulation,aEUR? and have a meaningful impact on eventual SEC rules governing Title III public securities crowdfunding. On the other hand, we noted that positive outcomes will increase pressure on the SEC aEURoeto embrace other 21st century tools and technologies that directly connect companies and investors.aEUR?

Finally, in response to the SECaEUR(TM)s request for public comment, we recently convened, in partnership with the Georgetown University Law Center, a roundtable discussion with key stakeholders focused on the proposed Title II rules. The public comment period ended today. We submitted a letter to the SEC aimed at promoting the responsible implementation of the JOBS Act aEUR" meaning ensuring investor and entrepreneur access to sound educational information, expanding access to capital for American companies, and ensuring investor protection.

Given our analysis of Title II of the JOBS Act over the past year, today marks an important milestone as key provisions go live. We look forward to monitoring marketplace and policy developments, and helping to inform the related national discussion on capital access.