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Rule 506 Advertising Ban Lifted by SEC

Today the SEC voted to implement the JOBS Act 506 rule change allowing general advertising and solicitation of Regulation D 506 offerings sold solely to accredited investors.

The proposed rules will require issuers that make use of the 506(c) offering to file Form D 15 days in advance of advertising the offering, and may require the issuer to potentially provide more information about their company. Issuers may not advertise their offering prior to the 15 day Form D filing window.

The SEC also issued rules regarding the issuers responsibilities to ensure investors are accredited under the new 506(c) exemption.

The methods described in the final rule include the following:

• Reviewing copies of any IRS form that reports the income of the purchaser and obtaining a written representation that the purchaser will likely continue to earn the necessary income in the current year.

• Receiving a written confirmation from a registered broker-dealer, SEC-registered investment adviser, licensed attorney, or certified public accountant that such entity or person has taken reasonable steps to verify the purchaser’s accredited status.

The new rule change will be deemed active 60 days after it is issued and entered into the Federal register.  We will provide updates as we learn more about this exciting development.


Wednesday July 10, 2013

Category: Uncategorized

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