HALOS Act of 2023 Helping Angels Lead Our Startups Act of 2023
Impact
The bill is expected to have significant implications for state laws pertaining to investment and securities. By allowing presentations and communications by or on behalf of issuers at specified events—such as those sponsored by government entities, educational institutions, or nonprofit organizations—this legislation seeks to create a more welcoming environment for startups looking to attract initial funding. This new framework will likely reduce barriers for entrepreneurs in accessing potential investors at organized events without violating existing securities laws.
Summary
SB3298, titled the Helping Angels Lead Our Startups Act of 2023, aims to mandate revisions to the rules established by the Securities and Exchange Commission (SEC) regarding general solicitation and advertising in the context of investment opportunities. The primary goal is to facilitate the participation of angel investor groups in funding early-stage businesses by clarifying regulations that govern how these investors can seek or advertise their investment opportunities. The bill underscores the importance of access to funding for startups while maintaining some regulatory oversight to protect investors.
Contention
However, the bill may generate discussion regarding regulatory compliance and investor protection. Critics may raise concerns that easing restrictions on general solicitation could lead to less rigorous oversight and potentially expose investors to higher risks without adequate information. Moreover, the definition of what constitutes a 'substantive relationship' between issuers and investors raises foundational questions about the SEC’s ability to effectively monitor and control the quality of information being shared during such investment events.