On October 23, 2013, the SEC released a set of proposed rules under the JOBS Act (the “Act”), which would permit emerging growth companies (EGC’s) to offer and sell securities through crowdfunding platforms. In their current form, the proposed rules closely resemble the original parameters outlined in Section III of the Act, the section from which the crowdfunding provision was born. The rules will be …
General Solicitation May Trigger State Investment Adviser Registration in Certain States
Background As a consequence of the Jumpstart Our Business Startups Act (“JOBS Act”), beginning September 23, 2013, managers of private funds will be permitted to advertise and solicit the general public in an effort to raise capital for their private fund. While the requirements for investment adviser registration vary from state to state, Florida, Indiana, Louisiana, Michigan, Ohio, Pennsylvania, and Tennessee provide an exemption to …
SEC Proposes Amendments to Rule 156 following repeal of the ban on General Solicitation under Rule 506
By Peter Tyson and Simon Riveles Following the SEC’s adoption of amended Rule 506, the SEC has proposed amendments to Rule 156 of the Securities Act of 1933 to extend the rule’s interpretive guidance on sales literature to private funds. The proposed amendments to Rule 156 reflect the SEC’s concerns regarding fraudulent and misleading sales literature, the incidence of which could increase given the adoption …
SEC Repeals the Ban on General Solicitation under Rule 506
On July 10, 2013, the Securities and Exchange Commission (the “Commission”) adopted amendments to Rule 506 of Regulation D (“Rule 506(c)”) implementing changes mandating by the Jumpstart Our Business Startups Act (“JOBS Act”). Rule 506(c) permits an issuer to engage in general solicitation or general advertising[1] in offering and selling of securities under Rule 506 provided such issuer reasonably believes and takes “reasonable steps” to …
SEC Approves New FINRA Member Communication Rules
In April, the SEC approved a significant revamping of FINRA rules regarding member communications with the public (the “New Rules”). The rule changes are a culmination of a multi-year effort by FINRA to update, harmonize and consolidate various NASD rules and interpretations regarding communication and advertising rules. New Communication Categories One of the most significant changes brought about by the New Rules is the consolidation …