SEC Adopts Rules for General Solicitations Under JOBS Act

News is still developing around this story and you can stay tuned here and to our twitter feed for the latest updates. Importantly, while the ruling has been passed, we are still gathering information on when the changes will go into effect. By default it would be 30 days from the date the rules are published in the Federal Register. In the unlikely event these changes are deemed to be a “major rule” then the Congressional Office of Information and Regulatory Affairs would have 60 days to review the ruling; again, that’s unlikely in this case. The piece below was originally posted by Brian Dengler on the CFIRA Blog:

In a close three to two vote, the Securities and Exchange Commission today adopted rules to eliminate the prohibition against general solicitation and Screen Shot 2013-07-10 at 11.40.52 AMgeneral advertising in private placements under the JOBS Act. The SEC also adopted so-called “bad actors” under the Dodd-Frank Act.

Under the JOBS Act, the SEC adopted amendments to eliminate the prohibition against general solicitation and general advertising in certain securities offerings conducted pursuant to Rule 506 of Regulation D under the Securities Act and Rule 144A under the Securities Act, as mandated by Section 201(a) of the Jumpstart Our Business Startups Act.  The new amendments would permit these general solicitations as long as issuers “take reasonable steps to verify” that all of the purchasers are accredited investors.

The Commission also adopted amendments to disqualify securities offerings involving certain “felons and other ‘bad actors’” from reliance on the exemption from Securities Act registration pursuant to Rule 506 as mandated by Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  SEC Chair Mary Jo White urged the Commission to consider the two amendments in tandem to help implement the JOBS Act and safeguard investors.

We look forward to hearing more from the SEC about Title III of the JOBS Act.

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