SEC Proposes Rules to Eliminate The Prohibition Against General Solicitation and General Advertising in Rule 506 and Rule 144A Offerings

If you or your company -- whether public or private -- anticipate relying on private markets for capital raising, you will want to keep abreast of recently proposed rulemaking by the Securities and Exchange Commission that is designed to facilitate capital raising in private offerings.

Specifically, the SEC recently proposed rules to amend Rule 506 of Regulation D and Rule 144A, as required by the Jumpstart Our Business Startups Act (the "JOBS Act") enacted earlier this year. The proposed amendments would permit general solicitation and advertising in unregistered offerings made pursuant to Rule 506 of Regulation D, provided all purchasers are accredited investors, and resales of securities pursuant to Rule 144A so long as purchasers are qualified institutional buyers ("QIBs"). The comment period for the new proposed rules expires October 5, 2012, with final (albeit potentially modified) SEC rules certain to follow, as required by the JOBS Act.

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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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