The President signed into law the Jumpstart Our Business Startups Act (the “JOBS Act” or the “Act”) on April 5, 2012. The Act represents a significant deregulation of private securities offerings and contains a number of provisions that will directly impact private funds, their advisers, and broker-dealers that participate in private fund offerings. This alert is directed only to those provisions of the Act. The entire Act has been addressed in an Alert from our Corporate Practice Group that can be accessed from the link at the end of this Alert. Specifically, the JOBS Act:

- requires the SEC to amend Rule 506 of Regulation D within 90 days of enactment to eliminate the prohibition on general solicitation and general advertising contained in Rule 503(c) on private offerings made pursuant to Rule 506, including offerings by hedge funds and private equity funds, as a condition of the safe harbor for exemption from registration under Section 4(2) of the Securities Act of 1933, as amended (“Securities Act”), provided that all purchasers are “accredited investors.”

- requires the SEC to further amend Rule 506 to require an issuer relying on that Rule to take reasonable steps to verify that the purchasers are accredited investors using methods to be determined by the SEC.