Ten intriguing numbers found in the SEC’s Final Rule for Lifting the General Solicitation Ban

On July 10th, the Securities and Exchange Commission lifted it’s ban on general solicitation / general advertising for certain private securities offerings. I am confident that this will have positive consequences for not only small businesses, startups and funds looking to raise equity, but for investors seeking investment opportunities. As a founder of a platform which specializes in private placements for commercial real estate investments, CrowdMason.com, I have been very focused on this rulemaking and am thrilled to see that it has become a reality. I will hold off on analyzing the rule for another post, but wanted to highlight certain facts that were identified in the rulemaking.

  • 18,187 New Form D filings in 2012 (this has increased by approximately 10% a year since 2009)
  • SEC believes that as a result of this amendment to rule 506, filings will increase by 20% going forward
  • In 2012 – 153,000 investors participated in offerings by operating companies (an additional 81,000 invested in pooled funds)
  • 2/3 of these had ten or fewer investors
  • Less than 5% of these had 30 or more investors
  • SEC believes that the burden to prepare a filing is 4 hours or $1,200
  • 8.7MM U.S. households (7.4% of all U.S. households) qualify as accredited investors in 2010
  • In 2010 analysis of retail brokerage accounts, 3.7MM accounts had at least $100k in direct equity investments
  • Even less 664,000 with $500k in direct equity investments (This matters because investing in public equities may be a gateway for investing in exempt offerings)
  • 11% of Form D filings between 2009 and 2012 used intermediaries which it paid a sales commission to (average commission was 5.9% of offering size)

Welcome thoughts and feedback, please suggest any other numbers or facts that should be added to this list.

Add a Comment

Your email address will not be published. Required fields are marked *