SEC Proposes New Rules Regarding General Solicitation and Advertising in Rule 506 Offerings
On August 12, 2012, the SEC proposed amendments to Rule 506 of Regulation D of the Securities Act of 1933, as amended (“Regulation D”) that would allow issuers to use general solicitation and advertising in certain private securities offerings. The proposals were mandated by the JOBS Act, and will allow the use of general solicitation and advertising in offerings made pursuant to Rule 506, as long as all purchasers of securities in the offering are accredited investors as defined in Rule 501(a) of Regulation D of the Securities Act.About Rule 506 Offerings.
Rule 502(c) of Rule 506 prohibits the use of general solicitation or advertising in connection with any offer or sale made pursuant to Rule 506. The proposal will exempt Rule 506 offerings from the prohibition against general solicitation and advertising contained in Rule 502(c), provided all of the investors are accredited investors.
The Rule 506 Offering Proposals
Issuers should be aware that the SEC has stressed that issuers will be required to take reasonable steps to verify that all purchasers are accredited investors, as defined in Rule 501(a). The SEC has not established a definitive procedure for such verification and has stated that the determination of accredited investor status will be based on the facts and circumstances of each particular situation.
Under the proposal, a check box will be added to Form D, item 6 which must be checked by issuers offering securities in reliance on the new Rule 506.
For more information about the JOBS Act please visit
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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Brenda Hamilton, Securities Attorney
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