On March 27, 2012, Congress passed the Jumpstart Our Business Startups (JOBS) Act, which is now headed to President Obama’s desk for signature. Included in the JOBS Act is a provision that eliminates the existing prohibition on general advertising and solicitation for securities offerings conducted under Rule 506 of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), as long as all investors in the offering are “accredited investors” as defined in the Securities Act. The JOBS Act directs the Securities and Exchange Commission (the “SEC”) to revise its regulations within 90 days of enactment to implement this amendment. Until the SEC issues revised regulations which will establish the new compliance obligations, issuers in Rule 506 “private placements” should continue to comply with the existing prohibition on general advertising and solicitation.
If signed by President Obama, and subject to the SEC regulations, this amendment will broaden the ability of issuers in Rule 506 “private placements” to market their offerings and discuss them publicly. Other provisions of the Securities Act and other securities laws and regulations governing various aspects of securities offerings, such as the Investment Company Act of 1940 and the Investment Advisers Act of 1940 will remain in effect. Specifically, statements about the issuer and offering still must be accurate, include all material facts and not be hyped or one-sided.
We will continue to monitor this legislation and will provide updates when the SEC proposes its regulations. If you have any questions about the status or details of enacted or proposed laws and regulations, please contact:
Keith W. Kaplan, Esq.
Jon M. Katona, Esq.
William W. Matthews, III, Esq.(215) 569-4281
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