Public Startup Company Receives Informal Inquiry Notice from Securities and Exchange Commission to Verify Compliance with SEC Rule 506(c) in JOBS Act General Solicitation
Henderson, NV, December 10, 2013 --(PR.com
)-- Public Startup Company, Inc. (https://PublicStartup.com) received notice from Securities and Exchange Commission, the SEC is conducting an informal inquiry into possible violations of federal securities law by the company or its Co-Founder/CEO, Jason Coombs.
The company is cooperating with the inquiry. Jason Coombs previously provided voluntary disclosures relating to general solicitation of the company's unregistered securities in compliance with JOBS Act Rules such as the company's "Investor Days" social media and JOBS-ACT.com website.
“I am happy to see confirmation the SEC is capable of executing important, time-sensitive investigations that can result in enforcement actions against anyone who might abuse or violate JOBS Act Rules,” said Jason Coombs, CEO of Public Startup Company, Inc. “For 79 years SEC has been driving financial market regulatory oversight for the U.S. government. To many observers it appeared the SEC was asleep at the wheel as it drove the U.S. economy off a cliff through its participation in what everyone knew was systemic corruption.”
Mr. Coombs has been writing letters to SEC on issues, including JOBS Act rulemaking now underway, since previous SEC Chair Mary Schapiro resigned in protest rather than follow federal law by allowing SEC to complete rulemaking mandated by the JOBS Act.
As former CEO of FINRA (Financial Industry Regulatory Authority) prior to being named SEC Chair in 2009, there were few people in the world with more expertise in the previously-corrupt politics of federal securities regulation than Mary Schapiro. She was in charge of FINRA, then SEC, during the financial crisis.
The JOBS Act legislation, which Mary Schapiro interfered with implementation of until her resignation, restores a basic constitutional right to speak publicly about capital fundraising, a right which Schapiro opposed because of her personal politics.
An email from Mary Schapiro revealed her reasoning, in her own words: "I don't want to be tagged with an Anti-Investor legacy."
“SEC is, and has been since 1934, just a political commission with no law enforcement power. It is not surprising that it was sabotaged from within for political reasons for eight decades but politics had a particularly harmful impact during tenure of Mary Schapiro,” said Jason Coombs. “Rather than working diligently to repair problems she helped to cause, Schapiro resigned.”
"Public Startup Company deeply understands these matters. We know how to build products to support the constitutional rights of all persons to speak publicly, truthfully, about the investment relationships that are necessary in order for any company to grow larger," said Mr. Coombs.
The politically-sensitive activity of capital formation has, for 80 years, been primarily for the wealthy. Raising equity capital or selling debt securities is a difficult endeavor. Few were successful under federal securities laws, old SEC regulations that existed prior to the JOBS Act, unless they were wealthy and had wealthy friends and family. Startups, people without substantial assets who needed to rely on others for capital, have historically been unable to raise capital. Instead, startups used systems of high-risk, high-interest lending such as credit cards.
Senator Carl Levin commented on December 5, 2013 “As the legislative history of the JOBS Act makes clear, Congress intended to help small businesses raise capital by lifting the ban on general solicitation.”
Under prior regulation, from 1933 until 2013, most people raised capital in compliance with federal law through Regulation D, Rule 506. Another letter co-authored by Senator Carl Levin highlighted possible fraud.
Up to 400 (or at most 2%) of “more than 20,000 Form D filings” annually have been fraud, suggesting sales of securities involving filing of Form D were among financial transactions least likely to be fraudulent.
Most people support freedom to use the Internet to raise capital publicly without government intervention or regulatory compliance burdens, but a few people insist everyone must be presumed guilty and prohibited from soliciting publicly. The JOBS Act restores constitutional rights to free speech and free association, in public, for lawful purposes, rights unconstitutionally infringed for 80 years.
“SEC must defend startup companies that might be preyed upon by fraudulent offers of funding. SEC also must watch markets to ensure only legitimate startups and others eligible to rely on federal regulations are selling unregistered securities,” said Jason Coombs.
An “informal inquiry” helps to ascertain whether civil lawsuits or investigations by state or federal law enforcement agencies are warranted. Thanks to new SEC Chair, former federal prosecutor Mary Jo White, a substantial number of startup companies and founders may receive such notices. When informal inquiry commences, Form 1662 is delivered along with a request for voluntary cooperation.
Public Startup Company, Inc., is a Nevada Corporation formed in 2012 by Jason Coombs and Andre Nogues to build Internet technology compatible with JOBS Act Rules, including crowdfunding and public, peer-to-peer cyber finance using forensic social media. The company is a subsidiary of Adia Nutrition, Inc. formerly known as PivX Solutions, Inc., whose name will change to Homeland Forensics, Inc., upon FINRA approval. ADIA is quoted Over-The-Counter under ticker symbol OTC Pink: ADIA.