Legislation\u00a0 presented by U.S. Senate Banking Committee chairman, Chris Dodd is working its way through the legislative process.\u00a0 The proposed \u201cRestoring American Financial Stability Act of 2009\u201d\u00a0 could make it significantly harder for film producers to utilize some of the most common investor-financing models to fund the budgets of their films.<\/p>\n

The bill is viewed by some\u00a0 as a way to sabotage the American creative dream machine by slipping in a little poison\u201d and \u201cthe death knell of American leadership in the world.\u201d<\/p>\n

Specifically, three provisions are of significant concern to those who rely on so-called “angel” capital.\u00a0 These provisions would:<\/p>\n

\n
1. increase the financial thresholds for qualification as \u201caccredited investors,\u201d who are, generally speaking, wealthy investors whose investments are not subject to significant federal securities regulation;<\/li>\n
2. allow the Securities and Exchange Commission (\u201cSEC\u201d) to make certain angel financing transactions subject to state regulation (previously, all so-called \u201cRule 506 offerings,\u201d which were commonly used for angel financings, were preempted from state regulation); and<\/li>\n
3. require that those \u201cRule 506 offerings\u201d that remain preempted from state regulation nonetheless be subject to a 120 day review process with the federal SEC.<\/li>\n<\/ol>\n

   Word on Capitol Hill is that the\u00a0 bill will undergo significant changes, but now is the time to contact your Senators and Representatives to voice your opposition to the above provisions.<\/p>\n

   Currently, an investor qualifies as “accredited if he or she has a net worth of $1 Million or more, or has an annual income over $200,000 ($300,000 for married couples).\u00a0 Under Rule 506, sales of securities to such investors are largely unregulated.\u00a0 This new bill would change that dramatically, increasing these limits, thus making it harder than ever to find qualified investors for high-risk investments like films, theatre projects or start-up ventures.<\/p>\n

   Source:\u00a0 Proposed financial regulatory reform bill will adjust accredited investor thresholds (WTN News)<\/a>.<\/p>\n

   Hat tip to my colleague Peter Levitan for bringing this to my attention.<\/p>\n","protected":false},"excerpt":{"rendered":"

   Legislation\u00a0 presented by U.S. Senate Banking Committee chairman, Chris Dodd is working its way through the legislative process.\u00a0 The proposed \u201cRestoring American Financial Stability Act of 2009\u201d\u00a0 could make it significantly harder for film producers to utilize some of the most common investor-financing models to fund the budgets of their films. The bill is viewed […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,54,8,9,10,12,16],"tags":[],"yoast_head":"\n