Highlights from the SEC investor alert on Reg A+

On July 8th, the SEC posted an investor alert regarding the new Reg A+. There was a lot of coverage of the rules when they came out and this SEC alert adds to the content. Here’s the highlights if you don’t want to read the whole thing…

On Investing in Reg A+ offerings in general

  • The SEC doesn’t pass upon the merits or give its approval to any securities offered. These are risky investments that you may not be able to sell (even though a company can sell existing shareholder’s shares during an offering).
  • All Reg A+ investments will have an offering circular that outlines the tier the offering is being conducted under along with other details of the offering. You need to know the Reg A+ offering tier as it will dictate many important items such as whether you can invest or not.
  • Company’s can only accept money for the sale of securities under Reg A+ after they’ve been qualified by the SEC. That doesn’t mean recommended or even accuracy checked, it just means that the SEC has accepted them under the regulation.

On Tier 1 and Tier 2 differences

Everything in the Tier 1 column is stuff that only applies to Tier 1 and vise versa for the Tier 2 column.

Tier 1

Tier 2

One notable distinction about investing in a Tier 1 offering is that companies relying on Tier 1 do not have ongoing reporting requirements other than a final report on the status of the offering. Companies offering securities under Tier 2 become subject to ongoing reporting requirements.
Companies that are conducting a Tier 1 offering must generally have their offering materials qualified by state securities regulators in the states in which the company plans to sell its securities. Financial statements disclosed in a Tier 2 offering have to be audited by an independent accountant.
Can raise up to $20 million in any 12-month period. Can offer up to $50 million in any 12-month period.
There are no limitations on whether you can invest, or how much you can invest, if you are investing in an offering relying on Tier 1 of Regulation A. If you’re investing in Tier 2, aren’t accredited, and the securities aren’t going to be listed on a national securities exchange upon qualification.You can only invest no more than 10% of you and your spouses annual income or net worth (excluding personal residence).


Updated 7/15/2015: Want to learn more about Reg A+? I’m putting on a live in-person event on August 4th 2015 with one of the key legal players in the formation of Reg A+. We’re lucky to have him here in Seattle and the event is open to all. Join me in this in depth conversation regarding Reg A+ with Mike Liles Jr. There’s some other great events I’m working on this summer as well including tax planning for angel investors, how to connect with angels through storytelling, and more.

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