What Does This Mean For You?
This means that if you are raising capital where the “Bad Actor” ruling applies, and you have someone on your team that has a bad act in their background you can lose your ability to raise capital for 5 years.*
Fortunately, the SEC gave business owners an easy way out. The ruling has a “Reasonable Care Exception” that reads, “The final rule provides an exception from disqualification when the issuer is able to demonstrate that it did not know and, in the exercise of reasonable care, could not have known that a covered person with a disqualifying event participated in the offering.”
This means if you do your due diligence FIRST then you are protected.