Wednesday, August 29, 2012

PROPOSED AMENDMENTS TO RULE 506 AND FORM D


The SEC is "proposing amendments to Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933 to implement Section 201(a) of the Jumpstart Our Business Startups Act. The proposed amendment to Rule 506 would provide that the prohibition against general solicitation and general advertising contained in Rule 502(c) of Regulation D would not apply to offers and sales of securities made pursuant to Rule 506, provided that all purchasers of the securities are accredited investors. The proposed amendment to Rule 506 would also require that, in Rule 506 offerings that use general solicitation or general advertising, the issuer take reasonable steps to verify that purchasers of the securities are accredited investors. The proposed amendment to Rule 144A(d)(1) would provide that securities may be offered pursuant to Rule 144A to persons other than qualified institutional buyers, provided that the securities are sold only to persons that the seller and any person acting on behalf of the seller reasonably believe are qualified institutional buyers. We are also proposing to revise Form D to add a separate check box for issuers to indicate whether they are using general solicitation or general advertising in a Rule 506 offering."

In summary, PROPOSED AMENDMENTS TO RULE 506 AND FORM D
A. Eliminating the Prohibition Against General Solicitation
B. Reasonable Steps to Verify Accredited Investor Status
C. Reasonable Belief that All Purchasers Are Accredited Investors
D. Form D Check Box for Rule 506(c) Offerings
E. Specific Issues for Privately Offered Funds

See: http://sec.gov/rules/proposed/2012/33-9354.pdf

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