Ten years after the original implementation of the JOBS Act of 2012, a new set of legislation is in the works that will make significant enhancements to capital raising for private investments such as real estate syndications and private funds. Since the legislation is in the early stages, there is no better time than now for investors to send emails to their elected government officials for bipartisan support and to request their elected representatives to support this effort and pass the bill quickly.
Here is a quick summary of what's in the current version of the bill.
Expand the Accredited Investor Definition
- Allow the use of self-certification for accreditation instead of using 3rd party letters for 506(c) offerings
- Expand definition of an accredited investor to include the following:
- At least $500,000 in investments - including digital assets
- All other investors can qualify as long as they limit their investment to the highest of the 10% of their total investments, annual income or net worth over the past 12 month period.
- Add the following clause that helps sponsors:
- ‘‘Unless the issuer knows, or has a reckless disregard for whether, the purchaser is not an accredited investor, obtaining a self-certification from the purchaser that the purchaser meets the income or net worth requirements of Rule 501 of Regulation D shall constitute reasonable steps to verify that purchasers of the securities are accredited investors.’’ after the period at the end.
Create a Definition for "Finders" to Allow for Legal Capital Raising
Creates a safe harbor clause for Finders from registration requirements. The bill defines a finder as the following.
- Receives transaction-based compensation of not more than $500,000 in any calendar
- Receives transaction-based compensation in connection with transactions that result in a single issuer selling securities valued at not more than $15,000,000 in any calendar year
- Receives transaction-based compensation in connection with transactions that result in any combination of issuers selling securities valued at not more than $30,000,000 in any calendar year
- Receives transaction-based compensation in connection with fewer than 16 transactions that are not part of the same offering or are otherwise unrelated in any calendar year.
3(c)(1) Investment Company Exemption for Startup Funds
- Update the 3(c)(1) exemption to permit up to 500 investors in the fund
- Update the 3(c)(1) exemption to raise the fund level to $50 million
Call to Action
The impact of this bill is significant to the private markets and investors seeking private market investments. It will open the door to a much larger base of investors and provide many investors with the opportunity to participate in private offerings that they are currently locked out.
What can you do:
- Email your elected officials in the US House of Representatives and the US Senate and tell them that you support the JOBS Act 2022 and that it expands your ability to invest in new investment opportunities.
- Tell your friends and family in different states about this bill so they can also support this proposal and push their elected officials to support it.
Links for investors to search for their elected officials:
https://www.house.gov/representatives/find-your-representative
https://www.senate.gov/senators/senators-contact.htm
To view the full text of the bill, see below.
https://www.banking.senate.gov/imo/media/doc/the_jobs_act_4.0discussiondraft.pdf
Sample email to elected officials:
Dear {insert name of official},
As an investor, I am writing to you about my support for JOBS Act 2022. Ten years ago, JOBS Act 2012 passed with bipartisan support and the impact to investors has been significant. It opened the door to private investments for many investors. JOBS Act 2022 opens the door for more investors to participate in private offerings. Current laws limit access to these investments to everyone except the top 10%. By supporting this legislation, you are helping a broader base of investors to participate in investment opportunities that have historically been limited to wealthy investors. Please support this bill and pass it quickly.
Thank you.
{investor name}
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Let come together, act with urgency and support JOBS Act 2022 which is in the best interest of our industry and our investors. We ask that you join us and get the word out to your professional network, your investors and your friends on this proposal and make our voices heard to our elected officials.
Thank you.
The Avestor team
