Shearman & Sterling LLP multinational law firm headquartered in New York City, United States.

balance scale

Sep 05, 2012

JOBS Act: SEC Proposes Rules Allowing General Solicitation and Advertising in Private Placements Under Rule 506 of Regulation D and Rule 144A

Subscribe

Jump to...

 

On August 29, 2012, the Securities and Exchange Commission proposed rule changes allowing general solicitation and advertising that the Jumpstart Our Business Startups Act (the “JOBS Act”) requires it to adopt. [1] The proposed rule changes would: (1) eliminate the prohibition on general solicitation [2] in Rule 506 private placements so long as the only purchasers are accredited investors or the issuer reasonably believes they are accredited investors at the time of sale; (2) require issuers that use general solicitation in Rule 506 offerings to take reasonable steps to verify that the purchasers are accredited investors; and (3) eliminate the restriction in Rule 144A on offers to persons other than qualified institutional buyers (“QIBs”) so long as sales are only made to QIBs or persons that the seller and any person acting on behalf of the seller reasonably believe are QIBs. The proposed rules do not affect traditional “quiet” Rule 506 offerings. In addition, the proposed rules would continue to permit concurrent offshore offerings conducted in reliance on Regulation S under the Securities Act.

The proposed rules have not yet taken effect and the SEC is taking comments from the public until 30 days after publication in the Federal Register. Until final rules are adopted, there will be no change to the prohibition on general solicitation.

View full memo, "JOBS Act: SEC Proposes Rules Allowing General Solicitation and Advertising in Private Placements Under Rule 506 of Regulation D and Rule 144A"

Authors and Contributors

Matthew Bersani

Partner

Capital Markets

+852 2978 8096

+852 2978 8096

Hong Kong

Jason Lehner

Partner

Capital Markets

+1 416 360 2974

+1 416 360 2974

Toronto

Antonia E. Stolper

Partner

Capital Markets

+1 212 848 5009

+1 212 848 5009

New York

Nathan Greene

Partner

Investment Funds

+1 212 848 4668

+1 212 848 4668

New York

John (Sean) Finley

Partner

Investment Funds

+1 212 848 4346

+1 212 848 4346

New York