Tossing the Baby with the Bathwater...

The proposed financial reform legislation has a rather nasty surprise buried in Section 926 - a provision that will substantially alter Reg D, which is the primary securities law exemption relied upon by start-ups seeking angel investors, as well as dramatically raising the bar for an individual to qualify as an accredited investor. A good summary of the proposal by Robert Litan is here, and you can sign a petition to save Reg D here. Given that there is no indication that I have seen anywhere that there is a problem with the current standard for accredited investors, nor that there is some need for the SEC to review a filing prepared by an unfunded company prior to raising operational funds, it is baffling that such a provision would be in a piece of legislation that presumably is focused on regulating public companies, and the banking and investment firms who have all contributed to the current business downturn. Angel investors create growth and jobs, so why make it more difficult for them to do so?