Title II of the JOBS Act called upon the SEC to implement rules lifting the ban on general solicitation in Rule 506 offerings, where all purchasers are limited to accredited investors.

This might have been a relatively straightforward instruction, except that Congress also required that the implementing rules must somehow call on issuers to "verify" the accredited status of the purchasers. While at the time no one actually said or intimated that the industry has seen widespread cheating to get around the accredited investor standard - verification was not a concern when the standard was modified by Dodd-Frank a few years back - several floated a vague presumption that went unchallenged: if issuers are tweeting broadly for angel investors, non-accrediteds will get caught up in the hype and lie, or issuers will be somehow inclined to look the other way, even though they didn't when 506 was "quiet."

To read the full, original article click on this link: