Securities and Exchange Commission Adopts Rules Allowing General Solicitation

SUMMARY. At an open meeting this morning, the Securities and Exchange Commission approved final rules implementing one of the most important changes to securities regulation and offering practices in decades: to allow the use of general solicitation or advertising in offerings to accredited investors that are exempt from registration under Rule 506 of Regulation D under the Securities Act of 1933. The Commission also adopted final rules disqualifying "bad actors" from relying on the exemption provided by Rule 506 and approved for publication a series of proposed rules to enhance its ability to monitor offerings. Neither the final rules nor the proposed rules have been published, and we will update this alert when the additional detail from the published regulations is available.

The most important action taken by the Commission was to authorize the issuance of an adopting release on final rule amendments allowing general solicitation in offerings to accredited investors that comply with Rule 506 of Regulation D, as mandated by Congress in the Jumpstart Our Business Startups ("JOBS") Act. The final rule, like the rule proposed on August 29, 2012, will require the issuer to apply a principles based approach in taking "reasonable steps to verify that purchasers are accredited investors," but will also include a nonexclusive list of methods to verify the accredited status of an individual purchaser. The Commission did not indicate when the final rule would be published or would be effective. The rule was adopted on a 4-to-1 vote, with Commissioner Aguilar voting against the rule amendments for the reasons discussed by numerous commentators and state regulators.

Full Story: https://clients.dorsey.com/rs/vm.ashx?ct=24F76D1ED4EB0AEDC1D180ACD42F921DDBBE7BB3D38714DD4CF371647BF8D90DDD78030