The Securities and Exchange Commission has approved a proposed rule to eliminate the current prohibition against general solicitation and advertising for private securities offerings.

The proposed exemptions, mandated by the JOBS Act, focus on offerings conducted under Rule 506 of Regulation D, one of the exemptions widely used by U.S. and foreign issuers to raise capital without registering their securities offerings. In 2011, the estimated amount of capital raised in these types of exempt offerings was just over $1 trillion, according to SEC data. The elimination of the prohibition, as well as a similar one contained in Rule 144A of the Securities Act, permits general solicitation as long as issuers “take reasonable steps to verify” that all of the purchasers are accredited investors.

Although applauded by the financial industry, the ability broadly market private securities via websites, e-mail and other media has faced objections from investor and consumer advocates who fear it will prove a boon to fraudsters.

That concern was cited by Commissioner Luis Aguilar, the sole vote against the proposed rule at Wednesday morning's meeting.

“Today's proposal greatly increases the vulnerability of investors,” he said. “The release simply acknowledges that one of the costs of this proposal will be, to quote, that it ‘could make it easier for promoters of fraudulent schemes.' However, there are no substantial proposals to address this increased vulnerability. “

Earlier this month, SEC Chairman Mary Schapiro announced that the Commission would vote on a proposed rule, with an accompanying public comment process, rather than an interim rule that would have immediately enacted the exemptions while simultaneously soliciting feedback.

Prior to the vote, Wednesday, Schapiro said a more cautious approach, rather than an interim rule, was warranted given significant changes taking place in the private offering landscape.

The Dodd Frank Act, for example, changed the accredited investor net worth test for Regulation D offerings by eliminating the investor's primary residence from the calculation and prohibiting the SEC from changing its net worth test before July 2014.The legislation also directs the SEC to undertake a review of the definition “in its entirety” beginning four years after its enactment. The Government Accountability Office, the investigative arm of Congress, is required to conduct a study of the accredited investor definition by next summer.

The JOBS Act also “significantly raises the thresholds for when companies have to start reporting with the SEC,” Schapiro said. That, combined with new offering techniques and secondary trading markets "could pose very significant challenges for investor protection."

"That's why it is very important for the Commission to study the changes, analyze the impact on investors, issuers and the markets, and take up any needed reforms," she said. "While I'm prepared to bring forward today's narrow proposal, I look forward to the continued examination of this critically important market.”

Commissioner Daniel Gallagher voted in favor, but expressed his displeasure with Shapiro's abandoning plans for an interim rule.

“I am not happy to be sitting here today, almost two months after the JOBS Act deadline for a final rule, voting on a proposal,” he said. “With an interim final rule we would have sent a less qualified and more welcome message to issuers,  whose need to efficiently raise capital drove Congress [to mandate the exemptions]. Yet, today are issuing a proposal, something we could have done months ago, for rules that may take until next year to be finalized in some form.”

Schapiro took umbrage to this concern, which was also raised by Commissioner Troy Parades.

“I find it interesting that I've not heard any similar concerns expressed about the many missed Dodd-Frank deadlines,” she said of comments made by those two Republican members of the Commission. “Indeed the argument has been ‘go slow, go slow, go slow, get it right, and don't worry about missing deadlines.' When serious commenters raised concerns about not having an opportunity to comment on a specific proposal, left with an interim final rule, it would be wrong not to give them that opportunity to be heard.”