The Securities and Exchange Commission Lifts The Ban On General Solicitation and General Advertising


The Securities and Exchange Commission (SEC) announced the elimination of the ban against general solicitation for offerings relying on Rule 506 of the Regulation D exemption.  The amendments to the rule were required by the Jumpstart Our Business Startups Act (“JOBS Act”).  This could change how Regional Centers attract investors through the EB-5 green card program.  The SEC requires registration of ALL offers by a company to sell securities unless they meet certain expensive and time consuming exemptions.  These exemptions are governed by SEC Regulation D (“Reg D”).  These offerings faced several offer restrictions to ensure that small businesses were not targeting vulnerable consumers, including the prohibition against General Solicitation and General Advertising.  This prohibition was a major issue for EB-5 centers because announcing availability in a Regional Center for EB-5 applicants was considered against the Reg D offering limitations.  The removal of this barrier provides a relief to EB-5 Regional Centers seeking investors interested in opportunities for their capital and could further increase the number of EB-5 applicants.