Section 201(a)(1) of the Jumpstart Our Business Startups Act (“JOBS Act”), enacted April 5, 2012,1 states:

Not later than 90 days after the date of enactment of this Act, the Securities and Exchange Commission shall revise its rules issued in section 230.506 of title 17, Code of Federal Regulations, to provide that the prohibition against general solicitation or general advertising contained in section 230.502(c) of such title shall not apply to offers and sales of securities made pursuant to section 230.506, provided that all purchasers of the securities are accredited investors. Such rules shall require the issuer to take reasonable steps to verify that purchasers of the securities are accredited investors, using such methods as determined by the Commission….

The statutory language in 201(a)(1) poses a number of interpretive ambiguities with regard to the mandated changes to rule 506. Some, but not all, of these have been addressed by the Securities and Exchange Commission in the amendments it proposed August 29, 2012.2

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