Re(1): Pre-existing Relationship with Investors Posted on June 21, 2011 at 05:57:54 AM by John Cones
Actually, the pre-existing relationship is not a direct requirement of the SEC. It's just one of the ways the SEC determines whether your offering has conducted a prohibited general solicitation. If you or someone among your company's upper level management has a pre-existing relationship with a prospective investor, contacting such a prospective investor would not be considered a prohibited general solicitation. Pre-existing means prior to the start of the offering and the contact needs to be sufficient to allow you to be able to determine whether the proposed investment is suitable for that prospective investor. We generally require as an investor suitability standard that the investment not exceed 10% of the prospective investor's net worth. And the subscription agreement will inquire as to whether the prospective investor is an accredited investor or non-accredited, among other things. You could not rely on the pre-existing relationships tax accountants have with their clients, unless the tax accountant was upper level management of your company. Yes, I am available to help independent filmmakers comply with the federal and state securities laws. My contact information is here at the website http://www.filmfinanceattorney.com
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