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

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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.