
A Call to Action - Help Protect Startup Financing - bigstartups
http://www.bigstartups.com/matt/blog/206/A-Call-to-Action---Help-Protect
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grellas
Repeal of Regulation D is huge and would, if effected, be highly negative for
startup financing.

Before Reg D, the only way to handle an inter-state offering of stock in an
early-stage company was to rely on so-called Section 4(2), a part of the
Securities Act of 1933 that specified a bunch of murky factors for what
constituted an "exempt" offering. If you failed to meet those requirements for
your company when it issued stock to investors, not only your company but all
of its controlling management could be sued and be required to refund all
monies to investors for any non-compliant offering. The results were often
highly surprising, e.g., where an issuer was found to have done a "public
offering" when it issued stock to 20 investors or so.

Regulation D changed this whole landscape by defining a set of "safe harbor"
requirements that, if met, assured the issuer and its management that the
securities law rules were met. It has been a huge success in bringing
certainty and clarity to an area that desperately needed it.

This is a surprise to me to learn that a Reg D repeal is to be found in
Senator Dodd's proposed legislation. There have been absolutely _no_ pending
efforts to repeal Reg D and it is insane to do it, at least from the
standpoint of startups and their investors.

The only thing could guess is that Senator Dodd is trying to slip this in as a
favor to the trial lawyers. It would be highly dismaying, and quite shocking,
if something like this does pass. It would definitely hurt startup funding in
significant ways.

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anamax
> There have been absolutely no pending efforts to repeal Reg D and it is
> insane to do it, at least from the standpoint of startups and their
> investors.

Sanity and law have only a passing acquaintance.

> The only thing could guess is that Senator Dodd is trying to slip this in as
> a favor to the trial lawyers.

Or maybe he's trying to get money from VC funds and others that would be
impacted.

Tne game is roughly "If I scare them, they'll pay money to talk with me."

Dodd is in a serious reelection fight. He took serious favors from Countrywide
Mortgage in return for looking the other way during the start of the housing
crisis. (His current defense is that he thought that everyone was on the
"friends of Angelo" list when it came to mortgages, Angelo being the name of
the president of CM at the time.)

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bigstartups
There's now an online petition at:

<http://gopetition.com/online/32354/signatures.html>

