On May 25, the Securities and Exchange Commission issued proposed rule amendments that disqualify securities offerings involving certain "felons and other 'bad actors'" from reliance on the safe harbor from registration under Section 4(2) of the Securities Act of 1933 provided by Rule 506 of Regulation D to reflect the requirements of Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 926 of the Dodd-Frank Act requires that that the SEC issue disqualification rules for Rule 506 offerings that are "substantially similar" to the disqualification rules provided by Rule 262 of the Securities Act, which apply to securities offerings under Regulation A.

The proposed rules would apply to the following "covered persons"...