In Intrastate offerings using 3(a)(11) exemptions, how does an issuer solicit sales to ip addresses only in its state?
On October 2, 2014, the Securities and Exchange Commission issued an updated compliance and disclosure interpretation addressing intrastate crowdfunding and Rule 147 of the Securities Act of 1933, as amended (the “Securities Act”). Rule 147 of the Securities Act is known as the intrastate exemption. It provides an exemption from the registration statement requirements for issuers conducting an intrastate offering that satisfies certain conditions including that sales may only be made to residents of the same state as the issuer. These conditions include that general advertising and general solicitation be allowed only within the issuer’s state. In its new guidance, the SEC indicates that using an established internet presence to issue information about specific investment opportunities would likely involve offers to residents outside the state in which the issuer does business. The SEC provided guidance for issuer’s using the internet for their intrastate offerings in an update to Question 141.05 published in April of 2014. Issuers should: • limit offers to persons whose IP address originates from a particular state or territory; and • take steps to prevent offers and sales to persons whose IP address originates in other states, Issuers should also use legends that conspicuously state that the offering is limited to residents of the issuer’s state under applicable law.
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