Moses & Singer LLP

The SEC Adopts Rules Permitting Public Advertising For "Private" Offerings Under Rule 506 Of Regulation D, Bad Actor Disqualification For Rule 506 Offerings, and Proposes Enhanced Disclosure and Amendments to Form D For Rule 506 Offerings

July 2013

By: Allan Grauberd

Moses & Singer Client Alert

On July 10, 2013, the Securities and Exchange Commission adopted final rules on two very significant proposals that are likely to cause fundamental changes in the private placement market.

For the first time, public advertising for private placements that are conducted under Rule 506 of Regulation D will be permitted, so long as the purchasers qualify as accredited investors and the issuer takes certain steps to verify the accredited status of the purchasers. In addition, for the first time, the Rule 506 exemption will be unavailable if certain persons associated with an issuer or a placement agent or investment manager participating in the offering have committed certain specified “bad acts”, generally relating to securities regulatory concerns and fraudulent practices. Both rules go into effect in 60 days from the publication of these rules in the Federal Register. In addition, the SEC has proposed enhancements to Form D and certain mandatory disclosures for specified Rule 506 offerings.

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