Members of Congress are looking to tweak rules issued by the Securities and Exchange Commission last year that allow the advertising and marketing of private securities offerings. Senate Bill 2498, Helping Angels Lead our Startups Act, also known as the HALOS Act, would ease requirements and restrictions on “demo days” and traveling road shows where issuers reach out to potential investors with in-person events.
Last July, the SEC amended the longstanding Regulation D. Intended to help expand startups’ access to capital; it now permits startups to use general solicitation when raising capital for non-publicly traded corporations, so long as steps are taken to verify accredited investors. The SEC created several safe harbors for meeting that requirement and, with a flexible approach, established methods that may be used. “These safe harbors raise privacy and compliance concerns for angel investors, requiring entrepreneurs and startups to take on a job they may not have the physical or financial means to do,” a statement accompanying the legislation says.“It has put educational and economic development events like demo days…at risk of being subject to onerous third-party verification rules.”
