SEC Marketing Limitations and Guidance For Reg A+ and Reg D 506c offerings

The SEC imposes key restrictions on advertising and promotional language for online investment offerings to ensure fairness and transparency. Here, we give you guidance on how to promote your Reg A+ or Reg D capital raise while staying within the SEC rules.

1. Availability of the Offering Documents. When a potential investor arrives on the offering page, the Offering Circular or PPM must be no more than one click away. The SEC wants a clickable link to the Offering Document(s) that is readily available near all investment buttons.

2. Forward-Looking Statements: Generally, you must avoid forecasting future events. For example, you cannot predict when you will expand into the XYZ market, or when a new product will begin shipping. You cannot claim or predict the timing of future scale-up events or future regulatory approvals. The SEC is more lenient with Reg D and more restrictive in the case of Reg A+.

3. Use Third Party Sources: In a Reg A+, you cannot predict your company's 5-year growth rate of revenues. However, you can include charts or data showing the growth rate of the market you serve as long as you provide a clickable link right next to the information to a credible third-party source. In this way, you provide evidence that enables the investor to draw their own conclusion that your company has good growth prospects. (in the case of Reg D, the SEC allows projected IRR and predicted developments for your business, with the use of clear caveat language).

4. If Promotional Materials Include Forward-Looking Statements: They must include cautionary language indicating that actual results may differ. These statements must be identified as forward-looking and must be reasonable based on available information.

5. Avoid Hyperbole: Overly promotional or hyperbolic language, such as “Revolutionizes the XYZ market” "once-in-a-lifetime opportunity" or "guaranteed success," is not allowed. The language should remain professional, clear, and factual, without hype.

6. No Misleading Statements: Marketing content must not include any untrue statements of material fact or omit material facts where doing so makes the statements misleading. This means all claims must be accurate, verifiable, and not exaggerated. If something will be done but is not being done right now, do not claim that it is available now.

7. Balanced Presentation: Promotional materials must present a balanced view of the investment. They should highlight risks and potential benefits, ensuring investors are fully informed.

8. Comparative Statements: If the materials compare the offering to other investments or companies, they must be fair and not misleading. Comparisons must be based on verifiable data and must not create false impressions.

9. No Celebrity Endorsements without Disclosure: If endorsements are used, the relationship between the endorser and the company must be disclosed. Such disclosure must not downplay the extent of these payments; rather, it must overstate the scale of the compensation. This ensures investors understand potential biases.

10. Equal availability of information: In a Reg A+ offering, if you provide any investor with information that is not already disclosed on the offering page or in the offering documents, you must prominently post that information on the offering page within 48 business hours so that all potential investors are equally informed. This is an important requirement that you must take care to deliver on. Make a conscious decision before you answer a new question - do you want to publish that question and your answer for all to see? If not, then politely decline to answer. In Reg D offerings, the SEC does not require equal information. However, it is beneficial in Reg D to provide equal information availability to reduce the risk of future legal action.

11. No Guaranteed Returns: Language suggesting guaranteed or assured returns is prohibited. Terms like "safe investment," "guaranteed profit," or "risk-free" are not allowed.

12. No Conditioning the Market: Communications should not improperly condition the market or create an artificial demand for the securities.

13. Disclaimers: All promotional materials must include disclaimers that clearly state the speculative nature of the investment, potential risks, and that past performance is not indicative of future results.

For more details and schedule information on Reg A+; Click here.

Rod Turner

Rod Turner is the founder and CEO of Manhattan Street Capital, the #1 Growth Capital service for mature startups and mid-sized companies to raise capital using Regulation A+. Turner has played a key role in building successful companies including Symantec/Norton (SYMC), Ashton Tate, MicroPort, Knowledge Adventure, and more. He is an experienced investor who has built a Venture Capital business (Irvine Ventures) and has made angel and mezzanine investments in companies such as Bloom, Amyris (AMRS), Ask Jeeves, and eASIC.

[email protected]

www.ManhattanStreetCapital.com

Manhattan Street Capital, 5694 Mission Center Rd, Suite 602-468, San Diego, CA 92108.