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Startups Remain Cloudy on the New General Solicitation Rule

President Barack Obama signs the Jumpstart Our Business Startups Act on April 5, 2012.
President Barack Obama signs the Jumpstart Our Business Startups Act on April 5, 2012.Photograph by Pablo Martinez Monsivais/AP Photo

On Monday, a Securities and Exchange Commission rule that lifts longstanding restrictions on how startups can market equity stakes to investors will take effect. That doesn’t mean the startup community is happy.

The rule was adopted in July and follows from the Jumpstart Our Business Startups Act, which called for ending the 80-year-old ban on general solicitation. Effectively, that means that startups, venture capital funds, and other private investment vehicles will be able to tell more potential investors that they’re raising money.