Are the Securities and Exchange Commission’s new general solicitation rules as clear as your morning coffee? On Sheppard Mullin’s Venture Law Blog, John Hempill and John Tishler attempt to clarify what Rule 506 means now for the angel investor and venture capital communities and private placements.
Classics Are Classic
Contrary to what some people are saying, the authors note the SEC “did not adopt a new definition for what constitutes general advertising or a general solicitation” with these new rules. If your offering is “classic”—i.e., does not engage in advertising or solicitation—conduct yourself as you would have before the rules were enacted. However, they note that issuers who are conducting a “classic” offering need to still ensure they are not contravening the new “bad actor” provisions of Rule 506.
