July 12, 2013 by Tamara Piety
Earlier I posted a piece about the gobsmacking decision in last year’s JOBS Act to let go of an 80 year old rule that prohibited general advertising for certain types of securities. Now we apparently have some rules from the SEC (despite some predictions I heard informally that the SEC would decline to do rule-making because insiders thought it was a really bad idea). Apparently those predictions were wrong as Professor Usha Rodrigues reports over at The Conglomerate
Here is the really interesting part.
I started my En Banc [Vanderbilt Law Review] piece with a hypothetical late-night infomercial-type scenario that I thought was pretty fanciful, but truth is apparently stranger than legal scholarship. The WSJ tells of entrepreneurs looking to use billboards, social media, and the products themselves as advertising. For example, a startup that converts shipping containers into portable produce gardens plans to cover one side of the 40-by-9-foot containers with billboard-style ads. Another plans to use ads on buses and in newspapers, plus hire people to wear T-shirts with the message, “especially window washers, because the skyscrapers they clean could have wealthy executives inside.”
As I have written about, we’re in a brave new world of private firms advertising to the general public. I’ve predicted that people will get upset as they realize that all of these exciting sounding opportunities are only available to the accredited investor. Security law’s dirty little secret–that the wealthy have special investment opportunities average Joes lack–may not be a secret much longer.
Indeed. I don’t think that is the only thing they will be upset about. Some may be upset to lose their money after a fly-by-night operation scams them for their money and doesn’t work about verifying their eligibility. (See the Conglomerate post for the details about who is eligible and how firms can be sure that you are.)
But this news from the WSJ makes you wonder how much faith to place in the prediction from Advertising Age that “Hedge Funds Won’t Rush to Advertise Even After Ban is Lifted.”
Apparently not all of the duck are in a row there…..