The HALOS Act makes it easier for startups and small companies to pitch their business ideas to potential angel investors without running into strict federal securities rules. Right now, companies can't advertise investment opportunities to the general public—they can only talk to accredited investors they already know. This bill creates an exception for events hosted by angel investor groups, allowing companies to present their business at these gatherings and talk about what they're raising money for, as long as they follow certain guardrails.

Here's what the bill allows: At angel investor events, a startup can describe what type of securities they're offering (like stock or bonds), how much they're raising, how much they've already raised, and what they'll use the money for. However, the event organizers can't give investment advice, negotiate deals on the spot, or charge fees based on the investments made. The company also can't use the event to advertise a specific offering or make detailed pitches about their financial performance or business prospects. Think of it like allowing startups to introduce themselves at a networking event without it counting as illegal advertising.

This change benefits early-stage companies and entrepreneurs who want to reach potential investors more easily, while also giving angel investors more opportunities to discover promising startups. The bill essentially tells the SEC to update its rules to permit these kinds of introductory presentations at legitimate angel investor events, making it less risky for both companies and investors to connect.

HALOS Act of 2023

Murphy, Christopher

Helping Angels Lead Our Startups Act of 2023 or the HALOS Act of 2023This bill directs the Securities and Exchange Commission (SEC) to revise Regulation D, which exempts certain offerings from SEC registration requirements but prohibits general solicitation or general advertising with respect to such offerings. Specifically, this prohibition shall not apply to events with specified kinds of sponsors—including angel investor groups unconnected to broker-dealers or investment advisers—where presentations or communications are made by or on behalf of an issuer, if<ul><li>the advertising does not refer to any specific offering of securities by the issuer;</li><li>the sponsor does not provide investment recommendation or advice to attendees, engage in investment negotiations with attendees, charge certain fees, or receive certain compensation; and</li><li>no specific information regarding a securities offering is communicated beyond&nbsp;the type and amount of securities being offered, the amount of securities already subscribed for, and the intended use of proceeds from the offering.</li></ul>