The SEC Adopts Rules to Allow General Solicitation in Rule 506 and Rule 144A Offerings, Adopts Rules Prohibiting “bad actors” From Relying on Rule 506, and Proposes Amendments to Regulation D, Form D and Rule 156

On July 10, 2013, the Securities and Exchange Commission (the “SEC”) adopted amendments to important rules used to offer securities in private placements:

- The SEC adopted new Rule 506(c) of Regulation D to permit general solicitation and general advertising in Rule 506 securities offerings, provided that all purchasers of the securities are accredited investors and the issuer reasonably believes, and takes reasonable steps to verify, that such purchasers are accredited investors, as required by Section 201(a) of the Jumpstart Our Business Act.

- The SEC adopted new rules that disqualify certain “bad actors” from relying on Rule 506.

- The SEC adopted new Rule 144A(d)(1) under the Securities Act of 1933, as amended (the “Securities Act”), to permit the offering of securities to persons other than qualified institutional buyers (“QIBs”) in Rule 144A offerings, including by means of general solicitation, provided that the securities are sold only to persons that the seller reasonably believes are QIBs.

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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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