SEC Grants Waiver Of Rule 506 Bad Actor Ban

Going Public Attorney- SEC Grants Waiver Of Rule 506 Bad Actor Ban

Securities Lawyer 101 Blog

On November 25, 2013, the Securities and Exchange Commission granted a waiver of the ban against bad actors under Rule 506 of Regulation D of the Securities Act of 1933. The waiver was granted to RBS Securities Inc. (“RBS”).

RBS requested relief from disqualifications from exemptions available under Regulation A and Rules 505 and 506 of Regulation D that arose by reason of the Final Judgment entered on November 25, 2013 by the United States District Court for the District of Connecticut in SEC v. RBS Securities Inc., Civil Action No. 13-1643.

The judgment, among other things, permanently restrains and enjoins RBS from violations of sections 17(a)(2) and (3) ofthe Securities Act and requires that RBS Securities pay disgorgement in the amount of $80,352,639, prejudgment interest in the amount of $25,190,552, and a civil monetary penalty of $48,211,5 83.

In its request RBS argued that:

♦ The judgment stemmed from a single offering of residential mortgage-backed securities in 2007;

♦ The judgement did not pertain to offerings under Regulation A or D.

♦ RBS took steps to measure to correct the misconduct alleged in the complaint.

♦ RBS took actions reasonably designed to prevent potential violations of Section 17(a)(2) and (3) in connection with disclosures related to, and offer and sale of, residential mortgage-backed securities.

♦ The disqualification of RBS from relying on the exemptions available under Regulation A and Rules 505 and 506 of Regulation D would be disproportionately severe in comparison to the alleged misconduct.

♦ For a period of five years from the date of the final judgment, RBS will furnish each purchaser in a Rule 506 offering that would otherwise be subject to the disqualification under Rule 506(d)( l) as a result of the final judgment, a description in writing of the judgment a reasonable time prior to sale.

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   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 and compliance 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.

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855