The SEC just announced some new rules, based largely on the requirements of the JOBS Act. These rules, on their surface, seem really great. They acknowledge the rise in angel investing by allow companies to seek out angels nationally via “general solicitation.” Unlike Crowdfunding, which allows companies to seek investment from the general public, these rules apply ONLY to accredited investors, who are deemed to be sophisticated and able to assume the large risks associated with angel investing.

This is a reasonable thing to do, since the early-stage investment asset class is virtually free of fraud and the investors don’t need protection from themselves.

But the SEC, in granting the permission to do general solicitation for accredited investors, proposed a set of rules that will all but kill angel investing in the US. I am not alone in this opinion. See: http://www.angelcapitalassociation.org/data/File/pdf/Release-New_SEC_Rules_Could_Kill_Angel_Investing_Final.pdf

If passed, any company that uses the new provision must file onerous forms with the SEC, will incur substantial legal fees, must investigate all of its investors to ensure that they meet the federal accredited investor standard, and face still sanctions if they don’t do everything correctly.

What problem is the SEC trying to fix? We don’t have fraud. It works now and the JOBS Act was put in place to ensure that more angel investing, not less, would occur, so that more startups would get going, grow, and create lots of the right kind of jobs.

This cannot stand! Write to your representatives in DC, the SEC, and express your outrage.