The SEC's Division of Trading and Markets has issued guidance on the exemption from the broker-dealer registration found in Title II of the JOBS Act.
The JOBS Act directed the SEC to revise its rules to provide that the prohibition against general solicitation or general advertising will not apply to offers and sales of securities made pursuant to the Securities Act of 1933 Rule 506 so long as all of the purchasers are accredited investors. Issuers must take reasonable steps to verify that purchases are accredited investors based upon methods established by the SEC. The Staff advised that the exemption from broker-dealer registration in JOBS Act Section 4(b) does not require the SEC to issue or adopt any rules. However, an issuer may not conduct a general solicitation of a Rule 506 offering on a trading platform until the SEC adopts rules to permit those activities. The SEC considers the exemption in JOBS Act Section 4(b) from the broker-dealer registration requirements to be fully operational and the exemption applies only to securities offered and sold under Rule 506 of Regulation D. The Staff also believes that Congress intended to capture social media and Internet websites when it enacted JOBS Act Section 4(b)(1)(A), so they would qualify as a platform or mechanism that permits the offer, sale, purchase, or negotiation of securities, or permits it to engage in general solicitations or advertisements or similar activities by the issuers of the securities.
An associated person of an issuer of Rule 506 securities may rely on the JOBS Act Section 4(b) exemption to maintain a platform or mechanism for the issuer's securities, assuming that the associated person otherwise qualifies for the exemption, including the condition prohibiting the receipt of any compensation in connection with the purchase or sale of securities. The SEC has previously noted that the persons, who market interests in a private fund, may be subject to the registration requirements of Securities Exchange Act of 1934 Section 15(a)(1). The exemption in JOBS Act Section 4(b) does not, however, exempt persons from state registration requirements.
Thus, there is no blanket exemption from broker-dealer registration by way of the JOBS Act.
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