After financial regulators and potential investors, the third group of people that care are your own disgruntled investors.
No startup company goes according to plan, and so (almost) every company has some investors that wish they could take back their investment.
Fortunately for them, one of the remedies to investors that get swept up in fund raisings that violate the Securities Act is a “right of rescission” – the ability to require the company to buy back their position (plus interest).
Later in the life of the company, a disgruntled shareholder hoping to force you to buy it out (or seek revenge) could look back to the original offering, and if it can identify violations of securities law it would have a very good case. A general solicitation is pretty easy to find because the internet does not forget, and form Ds are public – so finding violations, if you make them, is generally not hard.
So between regulators, potential investors, and your own investors: everyone cares! In the next post we’ll look at some of the consequences if you “blow the exemption”.