December 21, 2005
The General Solicitation Prohibition in Private Offerings
There is scattered evidence that the Securities and Exchange Commission has relaxed the prohibition on general solicitations in private offerings under Regulation D. Bartlett Essay. Hedge Funds have stretched the limits of the doctrine as they publicly advertise their activities and then raise money in private offerings. The argument is now reduced to the length of the "cooling off" period from the public ads and the private solicitations; it is thirty days and shortening. The SEC relaxation is in practice and not in law however and represents another example of the SEC failure to come to grips with the effect of the Internet on capital formation in the United States. These are difficult questions but they need to be revisited directly, not by inaction.
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