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Corporation Finance Issues General Solicitation Guidance

January 24, 2014
via Wikimedia

via Wikimedia

On January 23rd, the SEC’s Division of Corporation Finance provided additional guidance on new Securities Act Rule 506(c), which allows the use of general solicitation and advertising to offer securities exempt from the Securities Act’s registration requirements. The guidance is part of the Division’s Compliance and Disclosure Interpretations and can be found at new Questions 260.33 and 260.34.

Both questions address those situations in which an issuer commences an offering in reliance on Rule 506 before September 23, 2013, the effective date of the new Rule 506(c) general solicitation exemption, and continues the offering under Rule 506(c). In Question 260.33, the Division advises issuers that they need not take “reasonable steps to verify” the accredited investor status of investors who purchased securities in the offering before the issuer conducted the offering in reliance on Rule 506(c).

Question 260.34 advises that issuers who commenced a Rule 506 offering before September 23, 2013 and made sales either before or after that date in reliance on the exemption that became Rule 506(b) but now wish to continue the offering in reliance on Rule 506(c), may do so provided that any sales made after the issuer relies on Rule 506(c) are limited to accredited investors and the issuer takes reasonable steps to verify the accredited investor status of those purchasers. View the New Compliance and Disclosures Interpretations here.


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