General Solicitation and Bad Actor Guidance from the SEC

The Securities and Exchange Commission (the “SEC”) has released a series of Compliance and Disclosure Interpretations (the “Interpretations”) recently addressing the general solicitation exemption under new Rule 506(c) of Regulation D (the “General Solicitation Exemption”) and rules under new Rule 506(d) and (e) of Regulation D to disqualify certain securities offerings involving “bad actors” from reliance on Rule 506 of Regulation D (collectively, “Bad Actor Rules”).

I. General Solicitation Exemption Interpretations -

Switching between exemptions. An issuer who commences a Rule 506 offering prior to September 23, 2013, the effective date of the new Rule 506(c) exemption allowing issuers to conduct a general solicitation subject to certain requirements (the “Effective Date”), must file an amendment to its previously-filed Form D if it wishes to continue that offering after the Effective Date in accordance with Rule 506(c). Converting the offering to a Rule 506(c) offering would constitute a change in the information provided in the previously-filed Form D, requiring the issuer to check the Rule 506(c) box on the recently updated Form D.

Please see full memorandum below for more information.

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Topics:  Bad Actors, Compliance, Dodd-Frank, General Solicitation, JOBS Act, Rule 506 Offerings, SEC

Published In: Communications & Media Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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