This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Tweets Could Jeopardize Private Deals

NEW YORK (The Deal) -- A top Securities and Exchange Commission regulator acknowledged Friday that certain types of market-moving tweets by startup or fund executives could inadvertently disqualify a company from raising capital for 12 months as part of an investor protection requirement under review by the agency for ad-friendly private deals.

"We recognize in the proposal that there could be inadvertent tripping, so it is an issue that we are aware of," Keith Higgins, director of the SEC's Corporation Finance unit, told The Deal after speaking at a conference in Washington. "Under the rule as proposed it would be problematic. That was the proposal. We recognize that people might not know what a general solicitation is, that it could be inadvertent, and we've gotten a lot of helpful comments on it."

At issue is an SEC proposal that would increase protections for investors when they allocate capital to startup businesses, buyout shops and hedge funds that employ a new rule allowing them to publicly advertise private placements. The proposal would increase obligations associated with an SEC filing requirement known as Form D, which is available publicly on the agency's website and reports who is making an offer, its size and other details.

Firms and funds raising capital privately aren't punished for failing to file a Form D, and many don't. The SEC has proposed to toughen the Form D filing requirement as an added investor protection following the 2012 JOBS Act's removal of restrictions on advertising for private placements.

Must Read: How Twitter Broke GSV Capital In 2013

Startups and angel groups, in particular, are concerned about a provision that would require them to file about a wide variety of "communications," potentially including market-moving tweets, as soon as they make them or even perhaps in advance. Failure to file the material on time would disqualify a firm from raising capital for 12 months. That's an eternity for emerging companies, who argue that it could drive their businesses into bankruptcy.

Marianne Hudson, executive director of the Angel Capital Association, argued on the sidelines of the conference, which was held by the Angel Capital Association, that the disqualification provision is hugely problematic. She said startup companies would like to see some sort of ability to appeal a disqualification before a firm is prohibited from raising capital for 12 months.

Higgins said the issue is on the agency's list. "We know it is something that we have to accommodate and fix and make work," he said.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
YHOO $36.13 -1.10%
AAPL $95.35 1.80%
FB $117.85 -0.61%
GOOG $696.00 -0.32%
TSLA $233.55 -3.40%


Chart of I:DJI
DOW 17,770.29 -120.87 -0.68%
S&P 500 2,064.80 -16.63 -0.80%
NASDAQ 4,775.4250 -42.1690 -0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs