{"id":231,"date":"2013-08-05T11:15:37","date_gmt":"2013-08-05T16:15:37","guid":{"rendered":"http:\/\/www.accreditedinvestorleads.com\/?p=231"},"modified":"2020-01-22T12:21:20","modified_gmt":"2020-01-22T16:21:20","slug":"sec-issues-final-amendments","status":"publish","type":"post","link":"https:\/\/www.accreditedinvestorleads.com\/sec-issues-final-amendments\/","title":{"rendered":"SEC ISSUES FINAL AMENDMENTS TO RULE 506"},"content":{"rendered":"

For many companies, looking for investments to grow their businesses, there was a sense that this day would never come. The Securities Exchange Commission (\u201cSEC\u201d) concluded its process today and issued a final ruling eliminating the prohibitions on general solicitations, advertising Regulation D offerings to the general public.The final SEC changes to rule 506 have two major changes which impact the industry, the first more so than the second.<\/p>\n

Provision number one is in accordance with the Jumpstart Our Business Startups Act (\u201cJOBS Act\u201d) which effectively eliminates the ban on advertising of private offerings claiming a registration exemption under Regulation D. There are provisions, however.\u00a0 The most serious provision is that the purchasers of securities are still required to be accredited investors.<\/p>\n

The second rule change is in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (\u201cDodd-Frank Act\u201d) which amends Rules 501 and 506 to prohibit felons and other \u201cbad actors\u201d from participating in Regulation D offerings.<\/p>\n

Our main focus for today is on the first rule, allowing general solicitation.<\/p>\n

The SEC effectively punted on giving a detailed description of what \u201cGeneral Solicitation\u201d and \u201cGeneral Advertising\u201d entails, instead giving a broader description that describes these activities as such \u201cpublished in newspapers and magazines, communications broadcast over television and radio, and seminars where attendees have been invited by general solicitation or general advertising.\u201d\u00a0 Further, the SEC has \u201cconfirmed that other uses of publicly available media, such as unrestricted Web sites, also constitute general solicitation and general advertising.\u201d<\/p>\n

Additionally, in passing the final ruling, section(C) was added to Rule 506 in order to list out the particular conditions under which a general solicitation, for a securities offering exempt under regulation D, may occur. This new section requires the issuer to take reasonable steps to verify whether or not an investor is accredited. It provides a list of both non-exclusive and non-exhaustive factors to be considered by a company when reviewing the accreditation status of an investor. These are the SECs encouraged methods of verification to reach a standard of \u201creasonableness\u201d are:<\/p>\n