SEC Proposes Rule to Allow General Solicitation in Rule 506 Securities Offerings


On August 29, 2012 the Securities and Exchange Commission (“Commission”) proposed a rule that will allow for general solicitation in private securities offerings conducted pursuant to Rule 506 under the Securities Act.

The proposed rule was directed by Congress in the JOBS Act enacted on April 5, 2012. The JOBS Act directs the Commission to amend Rule 506 to permit general solicitation or general advertising in offerings made under Rule 506, provided that all purchasers of the securities are accredited investors. Some commentators have worried that eliminating the prohibition on general solicitation will create opportunities for fraud. The JOBS Act attempts to alleviate this concern by directing the Commission to require issuers making offers and sales pursuant to Rule 506 to take “reasonable steps” to verify that purchasers of the securities are accredited investors.

Please see full update below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Published In: Administrative Agency Updates, Business Organization Updates, 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.

© Venable LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »