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SEC lifts the ban, and everyone’s talking about it

 By: The AIMkts Editors

On July 10, the Securities and Exchange Commission lifted a nearly 80-year old ban on allowing alternative investment managers and others with investment opportunities to market their products directly to accredited investors with whom they do not have a preexisting relationship.

The reactions have been divided as some laud the increased opportunities for investors and entrepreneurs alike to connect and share the wealth, while others worry about the open door for fraud, misuse and abuse of the rules of the game.

What has been said in the past week?  AIMkts has collected what some commentators have said:


  • Barbara Roper, Consumer Federation of America: “The SEC is going to throw open the door to the mass marketing of so-called private offerings and never get around to market rules to protect investors.”
  • Democratic Commissioner Luis Aguilar was the only vote against the measure saying, “I am disappointed and saddened by the reckless adoption [of the rule]. I want to encourage you to fight on behalf of investors. They will need you now more than ever.”
  • “The SEC’s decision to adopt this final rule will do little to jump start investment, and much to weaken investor protections. The final rule puts essentially no effective limitations on the types or forms of advertising that can be used to promote high-risk investments, exposing unsuspecting investors to potentially misleading claims they will be unable to evaluate…It’s as if the SEC is jumping out of an airplane today, and then proposing to check the safety of its parachute on the way down.” – Sen. Carl Levin, D-Mich.
  • noted that Troy Paredes, one of the two commissioners voting against the new regulations, was particularly disappointed with the commission’s decision, saying that the new regulations will make it potentially “too costly for an enterprise to expand” operations and that it will “lead to new burdens.”
  • “First there’s the assumption that because you accumulated wealth you know how to manage it… Second, your mom or dad – perhaps very unsophisticated — could easily fall under the accredited investor definition. Say they just sold their Florida home and now have $1 million. Does this mean they should be investing in these more complicated investments? And do they know how to make those decisions?” – Jennifer Openshaw, president of Finect, as told to Fox News
  • “You know who it is going to help? Those companies that can’t get capital from anywhere else,” said Heath Abshure, the president of the North American Securities Administrators Association – a group of state regulators – and one of the most vocal opponents of the new rule. “Part of the lure of the hedge fund is keeping the undesirables out.”


  • “It’s a sensible and balanced approach. They’re not giving up investor protections, but they’re looking at a more modern view for general solicitation,” said Barbara Novick, vice chairman at New York-based BlackRock, the world’s largest asset manager. “To say that people can’t even put information out there just doesn’t make sense in the modern world.”
  • “The lifting of the ban on general solicitation will prove to be transformative,” said Barry Silbert, the head of the online private marketplace SecondMarket.
  • “As we fulfill our mission to facilitate capital formation and maintain fair and efficient markets, the Commission must always focus on strong investor protections,” said Mary Jo White, Chair of the SEC. “We want this new market and the private markets in general to thrive in a safe and efficient manner, and these rules we adopt and propose are designed to facilitate that objective.”
  • “Lifting the ban will help small businesses, and independent investors, because it will allow for increased flow of information,” Rory Eakin, COO of CircleUp, said an email. “Today, with the ban in place, only the most well-known investors get access to the best deal flow, making it more difficult for accredited investors across the country to invest in top deals.”
  • Wefunder – This lowers the barrier to investing cross country, growing your selection pool…. We’re going to see some exciting changes to the startup ecosystem! Fundraising and investing are about to get a lot more interesting.”
  • “A lot of noise is about to be introduced to the private markets, and distinguishing signal from noise will become critical for investors, and standing above the crowd will become critical for startups.” Alex Mittal, CEO of FundersClub
  • The irony is that hedge funds and private equity firms are accused of not being transparent, but much of this is due to the government’s own rules that force them to keep mum. Now that they will be free to communicate to the public, ordinary investors and financial researchers will gain from their insights.” – John Berlau, Competitive Enterprise Institute