SEC Proposes Amendments to Disqualify “Bad Actors” from Rule 506 Private Placements


The Securities and Exchange Commission (“SEC”) on May 25, 2011 proposed amendments to Rules 501 and 506 of Regulation D and to Form D in order to implement Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Specifically, the proposed amendments disqualify securities offerings involving “felons and other ‘bad actors’” from relying on the safe harbor from registration under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), provided by Rule 506 of Regulation D.

Rule 506 is the most widely used Regulation D exemption, accounting for approximately 90-95% of all Regulation D offerings.1 Rule 506 allows an unlimited dollar amount of securities to be sold, without registration, to an unlimited number of accredited investors and up to 35 non-accredited investors, provided that there is no general solicitation, resale limitations are imposed, applicable information requirements are met and the other conditions set forth in the rule are satisfied.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

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.

© Dechert LLP | Attorney Advertising

Written by:


Dechert LLP on:

Popular Topics
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.