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Amending Rule 506 — Lifting the Ban on the General Solicitation of Investors and the New Bad Act Disqualification

by Lane Powell PC - Seattle Office

October 7, 2013

Previously published on October 2, 2013

The Securities and Exchange Commission (“SEC”) recently enacted amendments to Rule 506 (“the Rule”) promulgated under the Securities Act of 1933, as amended, (“the Securities Act”). These amendments were required by the Jumpstart Our Business Startups Act of 2012 (“the JOBS Act”). As a result of the change, entrepreneurs have the ability in some circumstances to publicly advertise that they are fundraising for their businesses, which was previously impermissible under the Rule. However, the SEC also added new disqualification provisions related to prior bad acts by certain individuals. These changes represent a significant evolution in the process by which securities may be sold in private placements.


The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.

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