On July 10, 2013, the Securities and Exchange Commission (“SEC”) approved by a vote of 4-1 final rules that eliminate the prohibition against general solicitation and advertising in certain private offerings of securities. In addition, the SEC approved a final rule to disqualify issuers from relying on Rule 506 of the Securities Act of 1933 if certain felons and other “bad actors” are participating in such offering. Finally, the SEC proposed rules for comment in relation to their ability to evaluate the development of market practices in Rule 506 offerings.
Amendments to Rule 506 and Rule 144A to Lift General Solicitation and Advertising Ban -
Companies, private equity funds, venture capital funds or hedge funds seeking to raise capital through the sale of securities must either register the offering with the SEC, or rely on one of the many exemptions from registration. Under current Rule 506 of Regulation D, the most widely-used exemption, an issuer may sell an unlimited amount of securities to an unlimited number of “accredited investors” and up to 35 non-accredited investors. Under this exemption, however, the issuer cannot offer or sell such securities through any form of general solicitation or general advertising.
Please see full alert below for more information.
Firefox recommends the PDF Plugin for Mac OS X for viewing PDF documents in your browser.
We can also show you Legal Updates using the Google Viewer; however, you will need to be logged into Google Docs to view them.
Please choose one of the above to proceed!
LOADING PDF: If there are any problems, click here to download the file.
Topics: Advertising, Bad Actors, Dodd-Frank, General Solicitation, JOBS Act, Private Placements, Regulation D, Rule 144A, Rule 506 Offerings, SEC, Securities Act of 1933
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.
© Patterson Belknap Webb & Tyler LLP | Attorney Advertising