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SEC Proposes Rule Eliminating Ban on General Solicitation in Rule 506 and Rule 144A Offerings |
September 11, 2012
Previously published on September 6, 2012
On August 29, 2012, the Securities and Exchange Commission ("SEC") proposed amendments to Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933 (the "Securities Act") mandated by Section 201(a) of the Jumpstart Our Business Startups Act (the "JOBS Act"). The proposed amendments to Rule 506 would eliminate the prohibition against general solicitation and general advertising contained in Rule 502(c) of Regulation D for offers and sales of securities made pursuant to Rule 506, provided that (1) all purchasers are accredited investors and (2) the issuer takes reasonable steps to verify that purchasers of the securities are accredited investors. The proposed amendment to Rule 144A(d)(1) would permit offers of securities pursuant to Rule 144A to persons other than qualified institution buyers ("QIBs"), including by means of general solicitation or general advertising, provided that the securities are sold only to persons that the seller and any person acting on behalf of the seller reasonably believe are QIBs.
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