SEC Releases NPR re General Solicitation and Advertising in Reg D & Rule 144A Offerings
August 29, 2012
SEC Releases NPR re General Solicitation and Advertising in Reg D & Rule 144A Offerings: On August 29, the Securities and Exchange Commission (SEC) issued a notice of proposed rulemaking (NPR) that would eliminate the prohibition against general solicitation and general advertising in certain securities offerings under Rule 506 of Regulation D and Rule 144A of the Securities Act. The NPR was issued as required by the Jumpstart Our Business Startups (JOBS) Act. The proposed rules permit issuers to use general solicitation and advertising to offer securities under Rule 506 of Regulation D provided that the purchasers of the securities are accredited investors either because they fall into that category under existing Rule 501 or because the issuer believes the purchaser meets this designation at the time of sale, and that the issuer takes reasonable steps to verify that the purchasers are accredited investors. In addition, the NPR allows securities that are sold pursuant to Rule 144A to be offered to people other than QIBs as long as the securities are sold only to people the seller reasonably believes to be QIBs. Finally, the proposed rules would amend Form D to add a separate box for issuers to check if they are claiming the new Rule 506 exemption. Comments on the NPR are due 30 days after its publication in the Federal Register, which is expected shortly. Please click here for the NPR and here for the press release, which includes a fact sheet on the proposal.
SEC NPR: Eliminating the Prohibition Against General Solicitation and General Advertising in Rule 506 and Rule 144A Offerings – August 29, 2012