Securities Law Commons^™

Securities Regulation And Social Media, Seth C. Oranburg

Law Faculty Scholarship

Federal securities regulation originally divided corporate finance into two neat categories, public and private. In 1933, private financing was limited to “sophisticated” investors but otherwise lightly regulated. Public financing became heavily regulated. In 1982, the SEC introduced Reg D, which introduced the concept of “general solicitation” to clarify the distinction between public and private offerings. Reg D is well understood to prohibit newspaper advertisements and permit direct solicitations to venture capital investors. This enabled great wealth consolidation in regions like Silicon Valley while effectively banning general solicitations in private offerings.

Now, social media communication challenges the definition of “general solicitation.” …