Oftentimes, I am asked by clients seeking to raise capital what type of information they can include on their website to inform readers about the investment opportunity. Unfortunately, my answer is that no information may be included unless it is password protected and made available only to individuals that have been pre-screened as eligible “accredited investors.” The Securities and Exchange Commission (“SEC”) has provided specific guidance on this subject and the manner of using password protect information which can be found on its website.

Clients often respond by stating that they are not soliciting investors but are simply letting people know about the project. When pushed further, however, the client reveals that by telling people about the project on its website (or by bringing other attention to the project through broadcast, local newspapers and magazines or other forms of media this will draw inquiries from potential investors interested in participating in the project. Such activity, however, is considered a general solicitation and not permitted if an issue of securities intends to rely on the private offering exemption under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) or the safe harbor thereunder provided by Rule 506 of Regulation D.

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