SEC Proposes Rules Relating to General Advertising and Solicitations; Many Issues Still to Be Addressed Through Public Comment and Future Rulemaking
Summary Private fund managers should be aware that the Securities & Exchange Commission (the "SEC") voted on August 29, 2012 to issue proposed rules (the "Proposed Rules") to remove the ban on general solicitation and advertising related to certain private offerings. In the proposal, the SEC has requested further comments which are due by October 5, 2012. Until final rules are issued by the SEC, private fund managers should continue to follow existing SEC rules and guidance and not engage in any form of general advertising.
The Proposed Rules, required by The Jumpstart Our Business Startups Act (the "JOBS Act"), provide that: (a) the prohibition against general solicitation and advertising provided in Rule 502(c) of Regulation D will not apply to offerings made pursuant to Rule 506 so long as all the purchasers are accredited investors and the issuer has taken reasonable steps to verify that this is the case; (b) securities offered pursuant to Rule 144A offerings may be offered to persons other than "qualified institutional buyers" ("QIBs") provided that the securities are sold to persons whom the seller reasonably believed are QIBs; and (c) Form D will be revised so that issuers must indicate whether they have used any general solicitation or advertising in connection with a Rule 506 offering. For a complete copy of the Proposed Rules, please click here.
To read the entire release, please go to: http://www.sglawyers.com/admin/PDFs/215.PDF