The 2012 Jumpstart our Business Startups (JOBS) Act has instigated several vectors of change, most notably regarding crowdfunding. Another important change applies to the marketing of private placements, which heretofore were not allowed to be offered to the general public. The Act, following suitable rulemaking, will remove marketing prohibitions on private placements – you will be able to market your private securities to the general public as long as you only accept investments from accredited investors. We are waiting on the Securities and Exchange Commission to finalize these rule changes, which will probably kick in no sooner than 2013.
As you know from our previous blogs, an individual investor is “accredited” is he or she meets these two criteria:
- Income of at least $200,000 ($300,000 for married couples) over each of the past two years and a reasonable belief that this level of income will continue into the present year.
- Net worth of at least $1 million (individual or joint), not counting the value of your primary residence. If your primary residence is worth less than the balance on your mortgage, you must subtract the underwater amount from your net worth.
Assuming you meet these two requirements, you may participate in a private placement by filling out a questionnaire attesting to your financial status.
Very interesting, you say, but how does this affect my direct marketing strategy? Well, if you are mailing to investors that you believe to be accredited, what happens if you make a mistake and send an offer to someone who is not accredited? When the new law is implemented, you will be safe. At that time, you will have more reason to send out your mail campaign to the leads on your accredited investor lists – the kind we sell at Sales Leads.tv. You certainly don’t want to waste money or sully your reputation by marketing to non-accredited investors, but if by mistake you do, you will no longer be in jeopardy.
Under the forthcoming new rules, if you are an investment manager or hedge fund manager, you will be able to deploy a targeted direct mail campaign to accredited investors without worry. One thing you will want to avoid at all costs is a general direct mailing that is not made up exclusively of accredited investors – you will become the laughing stock of your industry. That’s why our accredited investor lists are so highly valued by direct mail marketers and telemarketers. Our lists are produced using two separate independent surveys and seldom contain mistakes, but the JOBS Act will eventually take you off the hook if an occasional mistake occurs. And, since you are marketing via the mail instead of by phone, you don’t have to worry about those pesky Do Not Call regulations. We invite direct mail marketers to inquire about our accredited investor lists – you will find them to be of the highest quality and very reasonably priced.