Title III Crowdfunding Advertising Rules

Advertising Rules and Restrictions

NOTE: Nothing in this information is intended as Legal Advice.

Always seek the advice of a competent professional advisor or lawyer with any questions you may have regarding these matters.

The SEC has stated in the adopting release that the permitted notices will be similar to “tombstone ads” under Securities Act Rule 134, except that the notices are intended to direct an investor to the intermediary’s platform or funding portal through which the offering is being conducted, such as through a link directing the investor to the platform.

Advertising Restrictions The final rules prohibit an issuer (or person acting on behalf of the issuer) from advertising the terms of the crowdfunding offering, except for limited notices (similar to “tombstone ads” permitted under Securities Act Rule 134) that direct investors to the intermediary’s platform. Information in advertising notices is limited to:

  • a statement that the issuer is conducting a crowdfunding offering, the name of the intermediary through which the offering is being conducted and a link to the intermediary’s platform;
  • the terms of the offering (the amount of securities offered, the nature of the securities, the price of the securities and the closing date of the offering period); and
  • limited factual information about the issuer: the name, address, phone number and website of the issuer; the email address of a representative of the issuer; and a brief description of the issuer’s business. The final rules do not impose limits on how the issuer distributes the advertising notices. For example, an issuer could place notices in newspapers or post notices on social media sites or the issuer’s own website.

In addition, issuers may communicate with investors about the terms of the offering through communication channels provided on the intermediary’s platform, provided an issuer identifies itself as the issuer in all communications.

The final rules also do not restrict an issuer’s ability to communicate other information that might occur in the ordinary course of its operations and that does not refer to the terms of the offering.

While the final rules do not provide a safe harbor for regularly released factual business information so long as it does not refer to the terms of the offering, the adopting release notes that issuers may generally look to the provisions of Securities Act Rule 169 (which permits non-reporting issuers engaged in an initial public offering to continue to publish regularly released factual business information) for guidance in making this determination in the Regulation Crowdfunding context.

In addition, the final rules do not restrict an issuer’s ability to communicate other information that might occur in the ordinary course of its operations and that does not refer to the terms of the offering.

As stated in the Proposing Release, we believe that this is consistent with the statute because Section 4A(b)(2) restricts the advertising of the terms of the offer.

The Commission has interpreted the term “offer” broadly, however, and has explained that “the publication of information and publicity efforts, made in advance of a proposed financing which have the effect of conditioning the public mind or arousing public interest in the issuer or in its securities constitutes an offer…” In this regard, we also note that Securities Act Rule 169 permits non-Exchange Act reporting issuers engaged in an initial public offering to continue to publish, subject to certain exclusions and conditions, regularly released factual business information that is intended for use by persons other than in their capacity as investors.

Issuers should generally look to the provisions of Rule 169 for guidance in making this determination in the Regulation Crowdfunding context.

SEC Release 33-9974, p. 144 (2015) (footnotes omitted).

Rule 169 – Exemption from sections 2(a)(10) and 5(c) of the Act for certain communications of regularly released factual business information.

Preliminary Notes to Rule 169:

1. This section is not available for any communication that, although in technical compliance with this section, is part of a plan or scheme to evade the requirements of section 5 of the Act.

2. This section provides a non-exclusive safe harbor for factual business information released or disseminated as provided in this section. Attempted compliance with this section does not act as an exclusive election and the issuer also may claim the availability of any other applicable exemption or exclusion. Reliance on this section does not affect the availability of any other exemption or exclusion from the definition of prospectus in section 2(a)(10) or the requirements of section 5 of the Act.

3. The availability of this section for a release or dissemination of a communication that contains or incorporates factual business information will not be affected by another release or dissemination of a communication that contains all or a portion of the same factual business information that does not satisfy the conditions of this section.

(a) For purposes of sections 2(a)(10) and 5(c) of the Act, the regular release or

dissemination by or on behalf of an issuer of communications containing factual business information shall be deemed not to constitute an offer to sell or offer for sale of a security by an issuer which is the subject of an offering pursuant to a registration statement that the issuer proposes to file, or has filed, or that is effective, if the conditions of this section are satisfied.

(b) Definitions.

(1) Factual business information means some or all of the following information that is released or disseminated under the conditions in paragraph (d) of this section:

(i) Factual information about the issuer, its business or financial developments, or other aspects of its business; and

(ii) Advertisements of, or other information about, the issuer’s products or services.

(2) For purposes of this section, the release or dissemination of a communication is by or on behalf of the issuer if the issuer or an agent or representative of the issuer, other than an offering participant who is an underwriter or dealer, authorizes or approves such release or dissemination before it is made.

(c) Exclusions. A communication containing information about the registered offering or released or disseminated as part of the offering activities in the registered offering is excluded from the exemption of this section.

(d) Conditions to exemption. The following conditions must be satisfied:

(1) The issuer has previously released or disseminated information of the type described in this section in the ordinary course of its business;

(2) The timing, manner, and form in which the information is released or disseminated is consistent in material respects with similar past releases or disseminations;

(3) The information is released or disseminated for intended use by persons, such as customers and suppliers, other than in their capacities as investors or potential investors in the issuer’s securities, by the issuer’s employees or agents who historically have provided such information; and

(4) The issuer is not an investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) or a business development company as defined in section 2(a)(48) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(48)).

§ 227.204 Advertising.

(a) An issuer may not, directly or indirectly, advertise the terms of an offering made in reliance on section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)), except for notices that meet the requirements of paragraph (b) of this section.

Instruction to paragraph (a). For purposes of this paragraph (a), issuer includes persons acting on behalf of the issuer.

(b) A notice may advertise any of the terms of an issuer’s offering made in reliance on section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)) if it directs investors to the intermediary’s platform and includes no more than the following information:

(1) A statement that the issuer is conducting an offering pursuant to section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)), the name of the intermediary through which the offering is being conducted and a link directing the potential investor to the intermediary’s platform;

(2) The terms of the offering; and

(3) Factual information about the legal identity and business location of the issuer, limited to the name of the issuer of the security, the address, phone number and Web site of the issuer, the email address of a representative of the issuer and a brief description of the business of the issuer.

(c) Notwithstanding the prohibition on advertising any of the terms of the offering, an issuer, and persons acting on behalf of the issuer, may communicate with investors and potential investors about the terms of the offering through communication channels provided by the intermediary on the intermediary’s platform, provided that an issuer identifies itself as the issuer in all communications. Persons acting on behalf of the issuer must identify their affiliation with the issuer in all communications on the intermediary’s platform.

Instruction to § 227.204. For purposes of this section, terms of the offering means the amount of securities offered, the nature of the securities, the price of the securities and the closing date of the offering period.

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6 Ways to Increase Efficiency and Focus

Business moves at supersonic speed. While technology has facilitated easier communication and information gathering, it has also ushered in a new economy in which the common worker can be more readily replaced by technological advancements than ever before.

The option to utilize advanced algorithms, data visualization and robotics as opposed to human assistance has become increasingly more alluring to organizations. In turn, the burden to prove themselves necessary has fallen upon the common worker.

Competency no longer does the trick. More so than ever, it is crucial for professionals to not only be able to complete tasks, but to be able to complete them with the utmost efficiency, accuracy and creativity.

Performing at a consistently high level requires sustained focus. Luckily, there are ways to train yourself in order to become the type of individual who not only produces results, but produces the type of results that make you an all-star in your respective area.

1. Define your goals and prioritize tasks accordingly.

The first step in concentration is to form a mental picture of what you wish to accomplish. Understanding why you are engaging in an activity and clearly stating what you hope to achieve from completing the task adds clarity to your thought process. It’s important to write down your objectives and pinpoint how that job assists you in meeting those overarching goals.

2. Slow down.

When you work with a deliberate slowness, it allows you to more effectively pay attention to the task at hand. When it comes to engaging in mindful work activities, it is important to gain the discipline to keep things simple and moving at a pace conducive to improved focus.

3. Conquer negativity.

Negative thoughts greatly drain mental capacity, as an unhealthy thought process overly stimulates the brain, increasing mental pressure and tension. When your mind is overloaded with threats, demands and counterproductive thoughts, cognitive impairment (a big hindrance to productivity) is the result.

Such tricks as remembering your core values, defining aspects of yourself that you are grateful for, breathing to relieve bodily tension and getting up and moving will lessen thoughts of doom and gloom and heighten your ability to think efficiently and produce at optimal levels.

4. Practice intense focus.

Whenever you fix your mind on a certain thought and hold your mind on it at successive intervals, you develop concentration. Understand that the human brain has limited capacity for attention. When you allocate anything less than 100 percent focus to a task, you weaken your ability to produce at a level consistent with your capabilities. If you wish to enhance the quality of your work, it is imperative to set aside any other activities that require effort for the time being.

When distractions such as emails, co-worker interactions and consistent client inquiries compete for your attention level, they dispose of a limited budget of mental capacity. Therefore, they must be put off until completion of that task or you risk a lesser output.

5. Confront procrastination.

Researchers estimate that nearly 15 percent of adults are chronic procrastinators. Putting off tasks is problematic on several fronts. First, when a job remains incomplete, it creates undue mental pressure straining your ability to focus on any other project. Additionally, failure to jump right in and see a project through to its end eventually becomes a habit and in time leads to low self-esteem.

Practices such as creating self-imposed deadlines, engaging in advanced planning and breaking a project into smaller steps will help combat procrastination.

6. Focus on the final product.

Knowing where a project is going is paramount to you being able to focus intently on that task. Understand what you expect out of the work will help you get down to work and provide you with the resiliency to finish the task.

As the working world evolves and many professionals find themselves ever closer to competing with efficient technologies in some aspect of their work, it is those who maintain the focus and good practices that lead to heightened effectiveness who will rise to the top, regardless of industry of position.

Are Small Businesses Spending Too Much Time on Social?

Day to day business activities have transformed dramatically since I launched my first company nearly 20 years ago. Back then, there was no Facebook, Twitter, Instagram, Pinterest or LinkedIn. My social contact with customers and potential customers was limited to email and phone conversations.

With the birth of social media, I was eager to adopt a new way of doing business. Like so many other small business owners, I was enamored by the possibility of reaching new customers at an unprecedented scale, getting free exposure and showing a more fun side of our business. I was determined to be the “social” company in my industry.

As time went on, some of the shiny facade of social media began to chip. I wondered if all the time I was spending on social activities like Instagram and Twitter was actually paying off. Using social media effectively takes an enormous effort, between creating original content, defining a social strategy and roadmap, managing communities, running targeted ads and more

Last year, Vertical Response conducted a survey of small businesses and social media and found that 43 percent of small businesses spend about six hours per week on social media (almost the equivalent of a full workday). Most telling to me, one-third of CEOs and small business owners wanted to spend less time on social media.

If you’re wondering if you or your business is spending too much time on social, here are a few things that I have learned.

Know your market before investing in social media.

With all the buzz surrounding social media, it’s easy to jump on the bandwagon without first creating a social strategy that makes sense for your business. Some businesses live on social media — for example, urban food trucks that use Twitter to let their customers know where they are. But that’s not every business.

The key to social media marketing is reaching your target audience wherever they live, work or play. If the people you’re trying to reach aren’t using Instagram, even the best content on Instagram won’t do a thing for your business. Think about the demographics of your target customers and research where they spend their time. You can even ask some of your existing customers which social platforms they’re likely to use, and where they’d like to connect with you.

Prioritizing your social media presence is the single most important thing you can do to minimize (and optimize) the time spent on social media.

Don’t ignore other channels because of social media.

You should never put so much time and energy into social media activities that you can’t do anything else. For some small businesses, a strong email campaign will be even more effective than social media, since email is a form of direct marketing.

Over the years, I came to discover that the more time time I spent on social media, the less social I was actually being. When I backed away from Twitter and Facebook, I had more time to answer phones and talk to customers one on one. Meeting people through live networking events and conferences is what keeps me inspired and driven. The bottom line is you don’t really know your customers if you’re just interacting through blog comments and retweets.

Learn to function without your smartphone.

As a mom of teens and tweens, I understand the importance of logging off from social media and putting away the phone. Some of the same messages I tell my daughter apply just as well to me as a CEO. We live in a distracted world, but your relationships will be impacted if you’re always distracted when talking to employees and customers. As hard as it may be, resist the urge to check your phone when talking to somebody; the conversation you’re having right now with an employee is just as important as the Facebook message you just received.

Listen to experts with a grain of salt.

Given social media’s popularity, it’s no surprise that an entire industry has sprouted up to help businesses manage their social media presence. Many small business owners are sold on the importance of social media by consultants who want to set up and manage their accounts.

I’ve been fortunate enough to work with a publicist and marketing manager who truly understands social. But, there are others out there who try to convince small business owners that creating a Facebook page will instantly double their sales leads. That’s setting the wrong expectations.

Before investing significant time in social media, you need to understand that “likes” don’t equal clicks or sales. The power of social media is that it helps foster loyalty, trust, and goodwill between you and your customers. Some of your social efforts will bring in direct sales, but more than likely, it will be a gradual process toward increasing your community and brand presence. Social media marketing requires a lot of patience, but don’t ignore all your other customer touch points along the way.

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