When it comes to following rules, who isn’t guilty of breaking one or two, here and there? It’s one thing to cut a line, or ignore the speed limit. But when it comes to communicating about your Reg CF campaign, there is no alternative approach: learn what the regulations are and follow them to the letter. Full stop.
Here at Crack the Crowd, we’ve read what the U.S. Securities and Exchange Commission (SEC) has to say about marketing a Reg CF campaign. It’s not exactly riveting reading, and some of the language isn’t so straightforward. This is why having legal counsel is important; your attorney can interpret the language for you and approve any copy you create so you don’t break terms. But attorney fees can add up quickly, which is why it’s to your advantage to familiarize yourself with what the SEC’s guidelines as you’re prepping for your campaign.
Keeping Your Reg CF Campaign Compliant
Compared to a Test the Waters, Reg A+, or even a Reg D 506(c) campaign, there are limits on what you can say about your Reg CF offer. To begin, you can’t publicly announce your Reg CF raise until it’s officially live. Otherwise, you’ll be seen as “conditioning the market” and the SEC has ruled that a no-no.
There are two types of communication you can use: Tombstone notices and Non Terms. Both allow you to talk about your raise, but limit the details of what you can include. When in doubt, direct potential investors to the platform hosting the raise, which can list all the details.
With a tombstone notice, you may issue a statement that your company’s conducting an offering pursuant to Section 4(a)(6) of the Securities Act. The notice can include:
- The name of your company and a brief company description, including the name and email of a company representative
- Details on the offering, like security type, price, and closing date of the campaign
- The name of the platform hosting your campaign
- A link to the landing page with all the details on your offering
- A notice that you are conducting a Regulation Crowdfunding campaign in accordance with Section 4(a)(6) of the Securities Act
A non terms communication is slightly more straightforward in terms of what you can say:
- Provide notice that you, the issuer, are conducting an offering
- The name of the funding portal and link to the website or platform (but be careful not to link to anything containing terms)
Here’s what you can’t say with non terms:
- The type of security
- The price of the security
- The number of securities you are offering
- The end date of the offering
- A link to a site that contains all the terms of your offering
- Other terms of your offering, like a projected return or interest rate, etc.
Keep All Messages Clear
Some other points to keep in mind are that your company must be clearly identified as the issuer and anyone acting on behalf of your company must identify his/her affiliation with you in all communications on the intermediary’s platform. Basically, be clear about each person involved and what his/her role is in the campaign. Document everything.
Don’t Stop Non-Campaign Related Marketing
Of course you can still talk about and advertise your business and product(s) to spread awareness of your brand and increase reach. The more people who know about what you do, the better off you’ll be once you announce the campaign. Just remember not mention your upcoming Reg CF campaign ahead of launching it.
Knowing all the rules, so you can keep compliance, will give you a leg up in crafting the content you need to prep for your campaign—not to mention save your attorney the time it takes to review your materials.