Publisher: TechJournal South
Date: August 29, 2012
The Securities and Exchange Commission has voted to issue a proposed rule that scraps a longstanding ban on routine communication with the general public from hedge funds, private equity firms, and venture capitalists.
The new rule is expected to go into effect by the end of the year. The proposal will be open for public comments for the next 30 days.
While aimed at preventing harm to investors, the rule, which has been in effect since the 1930s, also often limited venture capitalists and startup entrepreneurs from talking to the press openly about their fund raising activities for fear that doing so would be considered solicitation.
In a blog on OpenMarket.org, John Berlau, the Competitive Enterprise Institute’s senior fellow for finance and access to capital, explains why the 4-1 SEC vote is a victory for entrepreneurs, small investors, financial transparency, and the First Amendment. Read more here.