With two bad rules adopted on Wednesday, the Securities and Exchange Commission has all but invited hucksters, rip-off artists and other bad actors to prey on individual investors. The new rules are another disturbing sign that under the leadership of the new chairwoman, Mary Jo White, the S.E.C. will pursue deregulation at the expense of investor protection. One rule concerns “general solicitation,” or the mass advertising of investments in companies that are not publicly traded. Until last year, federal securities laws had long banned general solicitation — and for good reason. Private securities offerings — say, by hedge funds, venture capital firms and start-ups — are not subject to disclosure rules and other investor protections that apply to publicly held companies; as a result, they are difficult if not impossible to evaluate without inside knowledge and are especially prone to fraud. More in the New York Times here.
