The JOBS Act and Advertising in Rule 506 Offerings

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President Obama signed the “Jumpstart Our Business Startups Act” (the JOBS Act) on April 5. This bill will make it substantially easier for companies to raise money although key provisions do not take effect immediately.

Two parts of the Act that will be important for companies using private placement offerings to raise money are the provisions allowing crowdfunding and the provisions relaxing restrictions on Rule 506 offerings.The big change is that public advertising is allowed, although then all investors must be accredited investors – no non-accredited but sophisticated investors are allowed.

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