On July 10, 2013, the Securities and Exchange Commission adopted a new rule to eliminate the ban on general solicitation and general advertising for certain private securities offerings, as required by Section 201(a) of the JOBS Act. The final rule amends Rule 506 to permit issuers to use general solicitation and general advertising to offer their securities, provided that all purchasers of securities are accredited investors and the issuer takes “reasonable steps to verify” that such purchasers are accredited investors.
In connection with the new rule, the SEC voted to issue a rule proposal requiring issuers to provide additional information about Rule 506 offerings. Under the proposal, issuers that intend to engage in general solicitation as part of a Rule 506 offering would, in addition to the current requirements, be required to file the Form D at least 15 calendar days prior to engaging in general solicitation. Also, within 30 days of completion of an offering, issuers would be required to update the information contained in the Form D. The proposal would require issuers to include certain legends on any written general solicitation material and to file, on a temporary basis, those written materials with the SEC. Issuers would be disqualified from relying on Regulation D for one year if the issuer, or any predecessor or affiliate of the issuer, did not comply, within the last five years, with the Form D filing requirements in a Rule 506 offering.