SEC Chair Clarifies Effect of Proposed Rules on Newly Created Rule 506(c)


On July 10, 2013, the SEC approved final rules that repealed the ban on general solicitation in Rule 506(c) offerings if sales are made only to accredited investors and other conditions are met. On the same day, the SEC issued separate proposed rules that would amend Regulation D and Form D. These proposed rules include additional requirements in order for issuers to use the newly created Rule 506(c). Among other things, the proposed rules would require:

  • issuers to file a Form D with the SEC at least 15 days prior to using a general solicitation in a Rule 506(c) offering
  • certain legends and disclosures to accompany the general solicitation materials used in the Rule 506(c) offerings
  • issuers, for a temporary two-year period, to submit any written general solicitation materials used in Rule 506(c) offers to the SEC no later than the date of the first use of these materials

For further information on new Rule 506(c) as well as the proposed rules amending Regulation D and Form D, please see the July 18, 2013, edition of Securities and Financial News to Note.

In response to a letter from a House subcommittee, the SEC Chair Mary Jo White wrote a letter clarifying that the final rules eliminating the ban on general solicitation — which will become effective on September 23, 2013 — may be used starting on the effective date as long as issuers comply with the requirements set forth in that exemption. Chair White added that issuers are not required to comply with any aspect of the SEC's proposed rules until final rules are adopted and become effective.

To view the chairwoman's letter about the final rules, click here.

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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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