Several of our discussions have mentioned the SEC’s delay in adopting final implementing regulations under the JOBS Act of 2012, however, on September 23, 2013 a few new JOBS Act regulations will become effective to implement a lift on the ban on general solicitations or general advertising for certain private offerings.

1)  The final rules adopt amendment to Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933 and implement Section 201(a) of the JOBS Act, which permits an issuer to engage in general solicitation or general advertising in offering and selling securities under Rules 506as long all purchasers of the securities are accredited investors and the issuer takes reasonable steps to verify that the purchasers are accredited investors.

2)  The amendment to Rule 506 also includes a non-exclusive list of the measures which issuers may take to verify the accredited investor status of purchasers who are natural persons.

3) The amendment to Rule 144A provides that securities may be offered under Rule 144A to persons other than qualified institutional buyers as long as the securities are sold only to persons that the seller (and any person acting on behalf of the seller) reasonably believes are qualified institutional buyers.

4) In addition to these amendments, the SEC revised Form D to require issuers to indicate whether they are relying on the provisions permitting general solicitations or general advertising in a Rule 506 offering.

5) The SEC also adopted rules under the Dodd-Frank Act to disqualify felons and other “bad actors” from participating in certain securities offerings.

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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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