The US Securities and Exchange Commission has proposed eliminating the prohibition against general solicitation and general advertising in offerings of securities pursuant to Rule 506 of Regulation D and Rule 144A. If adopted as proposed, Rule 506 will contain two alternative methods of compliance. The first, which exists today, prohibiting general solicitation and general advertising, but allowing offers and sales to accredited investors and up to 35 non-accredited investors or persons who the issuer reasonably believes are not accredited investors who meet certain sophistication requirements. And the second, which is now under consideration, permitting general solicitation and general advertising, but not allowing sales to any non-accredited investors, including employees that are not accredited investors. The comment period for the rule proposals runs for 30 days from the date of their publication in the Federal Register. As a result, it is possible that the SEC could act to adopt final rules as early as October 2012.
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