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On July 10, the Securities and Exchange Commission adopted a rule to lift the ban on general solicitation and advertising in offerings of securities under Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933. The SEC also expanded the bar on “bad actors” from participating in private securities offerings. In addition, the SEC issued proposed rules with respect to expanded requirements for Rule 506 offerings where general solicitation and advertising are used. This article provides a summary of the reactions to the new rules and proposed rule, including commentary provided by the SEC commissioners. For a complete summary of the new rules as well as the proposed rule, use the following link: http://goo.gl/7e6ksE.

General Solicitation, Advertising Prohibition Gone

The Jumpstart Our Business Startups Act (JOBS Act), passed in 2012, mandated that the SEC eliminate the ban on general solicitation in Rule 506 offerings. After the rule becomes effective September 23, acceptable means of solicitation will encompass virtually any medium. Physical forms of soliciting investors will include mailings, newspaper advertisements and billboards. Electronic forms will include the Internet, social media, email and television.

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