As discussed here and here, the Securities and Exchange Commission (SEC) adopted changes to Regulation D and Rule 144A, addressing general solicitation, new filing requirements and “bad actor” disqualification events (among others) applicable to Rule 506 offerings. These changes went into effect on September 23, 2013, and on November 13, 2013, the SEC published additional Compliance and Disclosure Interpretations (C&DIs) relating to Rule 144A and Rule 506(c).

 The new C&DIs include the following guidance:

• The continuation of an offering that originally commenced under Rule 506 prior to September 23, 2013, under the new general solicitation regime would require an amendment to Form D to check the 506(c) box.  [260.05]
• If a purchaser in a Rule 506(c) offering were not accredited, the issuer would not lose the exemption if the other requirements of a Rule 506(c) offering were followed, such as taking reasonable steps to verify the accredited investor status.  [260.06]
• On the other hand, even if all purchasers are accredited investors, an issuer is not eligible to use Rule 506(c) if reasonable steps to verify have not been taken.  [260.07]
• Statements reviewed for purposes of verification must be dated within three months of the sale of the security in order to satisfy the non-exclusive verification method specified in Rule 506(c).  [260.08]
• An attorney or accountant verifying accredited investor status may be licensed in a foreign jurisdiction and satisfy the non-exclusive verification method specified in the rule.  [260.09]
• The verification method for existing investors from a prior sale of securities would not be satisfied if the investor had previously invested in an affiliated issuer, such as a fund with a common sponsor.  The previous investment must have been in the issuer in which the investor proposes to invest.  [260.10]
• An issuer that commences an offering intending to rely on Rule 506(c) may transition to 506(b) so long as the conditions of Rule 506(b) have been “satisfied with respect to all sales of securities that have occurred in the offering.”  An amendment to the Form D would be required.  [260.11]  The opposite also applies, but note that the language of the interpretation looks to all securities sold in the offering and not just those after transitioning from paragraph (b) to (c) or from (c) to (b) of Rule 506.
• An offering that commences under Rule 506(c) and in which general solicitation has actually occurred may not transition to a pure Section 4(a)(2) offering.  [260.13]

We understand that guidance on who is an affiliated issuer for purposes of the Rule 506(d) bad actor disqualification will be published at a later date.