EarlyIQ, Inc. Launches Industry First Regulation D, Rule 506 Compliance Report
June 9, 2014 - SAN DIEGO, CA
SAN DIEGO, CA--(Marketwired - June 09, 2014) - Today, EarlyIQ, Inc. announced the first industry report targeted at simplifying compliance with Bad Actor provisions under U.S. Securities and Exchange Commission (SEC) Regulation D, Rule 506(d). Under the rule, certain disqualifying events must be monitored and disclosed in order to offer securities in compliance with the safe harbor for Regulation D, Rules 506(b) and 506(c). The report, customized to each issuer and delivered via the EarlyIQ hosted platform, streamlines the process for all constituents involved in promoting, executing, and issuing securities under the Regulation.
The new report, used by online funding platforms, broker/dealers, other private investment intermediaries, as well as angel groups and other accredited investors helps ensure compliance with Regulation D, Rule 506(d). The Regulation requires that issuers of all private securities sold under Rule 506 disclose covered events or disqualify certain principles involved with a company seeking funding under the safe harbor. The scope of the requirement spans across multiple data sources where information is provided in an unstructured, ad hoc format. The process can be confusing and cumbersome. The EarlyIQ report streamlines this aspect of the diligence process for industry constituents.
"There's a fair amount of confusion in the industry about the new 'Bad Actor' disclosure and disqualification requirements -- when is it required, who is responsible, and how to comply with the Reg," said Steve Yin, co-founder and CEO of EarlyIQ. "In fact, many people we talk with don't realize they are directly impacted by the new Regs. Our goal with this new offering is to simplify the compliance process for issuers, broker/dealers, angel groups, and other private investors."
The Rule 506 Report goes well beyond streamlined compliance. In addition to screening for disqualification and disclosure events, the report contains:
- Business entity verification
- Positive online identity verification of all applicants
- National criminal records search
- Patriot Act records search through the OFAC database
- Other regulatory infractions search
"Rule 506(d) creates a tight definition for disqualification and disclosure. Our customers have asked for greater coverage than simply researching the basics for compliance," according to Yin. "Many people are surprised to learn that the majority of felony convictions do not fall under Rule 506(d), yet they still want visibility into all these events. That's where our report really shines."
Originally mandated as part of the Dodd-Frank Act, the Bad Actor provisions within Regulation D, 506(d) require research and disclosure across several areas of criminal and regulatory infractions ranging from certain felony criminal convictions, to SEC sanctions, to infractions associated with misuse of the US Postal Service. Due to the broad scope and disjointed nature of the various disqualifying and disclosing events, collection of the information and compliance with the regulation is a cumbersome, manual process.
The EarlyIQ Rule 506 Report is available immediately and can be commissioned and purchased at www.earlyiq.com/product/506-screening. Investment intermediaries such as broker/dealers, online funding platforms, and other professional service providers who facilitate private securities transactions can partner with EarlyIQ for co-branded, customized reports.
Early IQ, Inc. is a San Diego, California based, hosted software, information and analytics company serving early stage capital markets including broker/dealers, crowdfunding, accredited online funding, peer lending, angel, accredited and professional investment. We provide an industry-leading suite of tools for diligence, regulatory compliance and fraud mitigation. Our efficient, secure and streamlined solutions are used to help vet and evaluate private investment opportunities while also enabling compliance with Federal regulations including SEC Regulation D, Rule 506 accredited investor verification and Bad Actor compliance. www.earlyiq.com