Business Communications and Solicitations
This information is provided for general informational purposes only and should not be relied upon as legal interpretations by the Office, shall not supersede any part of the Florida Statutes or Florida Administrative Code, and does not constitute legal or financial advice. The Office does not endorse any third-party or guarantee the accuracy of any third-party information linked to or referenced herein.
To protect investors, private investment solicitations are strictly regulated. Many offerings prohibit general solicitation and are limited to family, friends, and pre-existing relationships.
Issuing companies are required to comply with the solicitation provisions set forth in the regulatory exemption used to conduct the offering.
General Solicitation
General solicitation is any communication that prepares the market for an offering of securities, including newspaper or magazine advertisements, public website advertisements, television or radio broadcast advertisements, events, and conference presentations.
Pre-Existing Relationships
A pre-existing relationship is a relationship that is established with a prospective investor prior to the offering, either directly with the company or through the company’s intermediary (such as its broker-dealer or investment adviser).
Accredited and Retail Investors
An accredited investor is an individual who meets the criteria set forth in Rule 501(a) of Regulation D. Individuals may qualify by having:
- Annual single income exceeding $200,000 or joint annual income exceeding $300,000 in each of the two most recent years.
- More than $1 million in net worth (excluding primary residence).
- Certain financial professional credentials.
Non-Accredited investors are all other investors that do not meet any of the accredited investor definitions.
Verifying Investor Accreditation Status
Many offering exemptions include the requirement that issuers must reasonably believe investors are accredited at the time the securities are sold. In contrast, U.S. Securities and Exchange Commission Rule 506(c) requires issuers to take reasonable steps to verify accreditation status.
For offering exemptions that prohibit general solicitation, issuers cannot::
- Cold-call potential investors
- Advertise and organize a meeting of people they don’t know to try to meet the definition of a pre-existing relationship.
- Purchase mailing lists or contact lists of potential investors.
- Conduct any advertising efforts that would be considered general solicitation.