SEC Adopts and Proposes New Rules for Accredited Investor Offerings
The SEC has adopted final rule amendments which:
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remove the prohibition on general solicitation and general advertising from Rule 506 of Regulation D (the safe harbor for the private offering exemption, often referred to as the accredited investor exemption) and Rule 144A (the resale exemption to qualified institutional buyers) under the Securities Act of 1933, as amended; and
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disqualify securities offerings involving certain felons and other “bad actors” from reliance on Rule 506 of Regulation D.
The amendments to the rules are effective 60 days after publication in the Federal Register.
In addition, the SEC published for comment a number of proposed amendments to Regulation D, Form D and Rule 156 that are intended to enhance the SEC’s ability to evaluate the development of market practices in Rule 506 offerings and to address concerns that may arise in connection with permitting issuers to engage in general solicitation and general advertising.
Summary of Amendments
General Solicitation and General Advertising
The rule amendments removing the ban on general solicitation and general advertising for private placements under Rule 506 of Regulation D implement Section 201(a) of the JOBS Act. These amendments will create a new class of offering under Rule 506(c) that will permit issuers to engage in general solicitation and general advertising for the offering, provided that all of the investors that purchase securities in the offering are accredited, and that issuers take “reasonable steps to verify” that all investors that purchase securities in the offering are accredited. The rule amendments specify a principles-based approach (rather than a prescriptive approach) to the issuer verification requirement, supplemented by a non-exclusive list of methods that issuers may use to satisfy the verification requirement for accredited investors who are natural persons.
Bad Actor Disqualification
The rule amendments prohibiting felons and other bad actors from participating in a Rule 506 offering implement Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The disqualification will apply if the issuer or other covered persons (i.e., directors, certain officers, significant shareholders, underwriters or other placement agents) have been convicted of, or are subject to court or administrative sanctions for, securities fraud or other violations of specified laws. All sales made under Rule 506 after the effective date of the amendments would be subject to the disqualification provisions. Disqualifying events that occurred before the effective date of the rule amendments will not result in disqualification provided that disclosure to investors regarding such events is provided.
Effect of Amendments
The removal of the prohibition on general solicitation and general advertising has been a contentious issue and the proposing release attracted significant comment from a wide range of individuals and organizations. On the one hand, proponents argue that removal of the prohibition will increase the ability of small businesses to raise capital, allowing issuers to reach a much wider audience of potential investors on a national or even global scale. On the other hand, those opposing the removal of the prohibition argue that the prohibition helps prevent securities fraud by limiting the ability of fraudulent issuers to access unsophisticated victims. In their remarks in the adopting meeting, the individual SEC commissioners expressed significant concern about the potential for fraudulent activity under new Rule 506(c) and repeatedly cautioned market participants that the SEC will be closely monitoring activity under the Rule.
It is not clear under the new Rule whether issuers will avail themselves of the ability to generally solicit and generally advertise in a private offering. Issuers will face significant uncertainty as to whether they have taken reasonable steps to verify that all purchasers in a Rule 506 offering are accredited investors. The intrusiveness of the methods in the non-exclusive list that issuers may use to satisfy the verification requirement for individual accredited investors may dissuade such investors from participating in such offerings. The contractual arrangements that would need to exist for issuers to be able to rely on third parties to conduct such a verification process on their behalf, and any indemnification for damages associated with such third-party verification activities or lack thereof, may be unrealistic. The existing Form D amendments will likely invite increased SEC scrutiny of any such offering, particularly in light of the SEC’s stated goal with the proposed Regulation D amendments of continued evaluation of the effect of the removal of the prohibition in Rule 506 offerings. The proposed amendments suggest that the SEC may be moving in the direction of more closely examining the sufficiency of the disclosure in the offering documentation. Finally, foreign issuers may be subject to a similar prohibition on general solicitation and general advertising under their existing home country laws that may not permit them to engage in such activity even if permitted by the U.S. rule amendments. In light of these considerations, issuers may be reluctant to engage in such an offering when the traditional Rule 506(b) offering is still available until time has passed and there is additional information available that will allow them to more effectively evaluate the costs and benefits associated with conducting a Rule 506(c) offering.
With respect to the bad actor disqualification provisions, issuers and broker-dealers must evaluate the existence of disqualifying events with respect to their relevant covered persons. Corporations that are likely to rely on the accredited investor exemption for offers and sales of securities in the U.S. should consider developing and circulating a questionnaire to their directors, executive officers and any officers that are likely to be involved in a future offering to confirm that they are not subject to a disqualifying event, and should “bring this down” at the time of the actual offering. Issuers that are listed on a stock exchange may find that much of such information with respect to their covered persons was required to be provided to such stock exchange on and after listing. An issuer will need to evaluate how it is going to ensure that any broker-dealer involved in an offering of the issuer’s securities has not been involved in a disqualifying event sufficiently early in the process that any required disclosure is provided to investors. It is likely that placement agency and underwriting agreements will contain reciprocal representations and warranties by the issuer and broker-dealer with respect to disqualifying events.
Removal of Prohibition on General Solicitation and General Advertising
Amendments to the Accredited Investor Exemption under Rule 506
Rule 506 of Regulation D is an exemption from the registration requirements of the Securities Act which can be used by both public and private companies to offer and sell an unlimited amount of securities to an unlimited number of accredited investors and up to 35 non-accredited investors. General solicitation and general advertisement of securities were previously prohibited in Rule 506 offerings. This prohibition on general solicitation and general advertising meant that issuers had to have a pre-existing relationship with offerees in a Rule 506 offering, resulting in significant limitations on the ability of issuers to raise private capital in a Rule 506 offering.
The amendments add a new Rule 506(c) that exempts offers and sales of securities made pursuant to Rule 506 from the prohibition against general solicitation and general advertising contained in Regulation D provided that:
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all purchasers of the securities are accredited investors at the time of the sale of the securities either because they fit within the definition of “accredited investor” or because the issuer reasonably believes that they fit within the definition of “accredited investor”;
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the issuer takes reasonable steps to verify that all purchasers of the securities are accredited investors; and
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all terms and conditions of Rule 501 (definitions) and Rules 502(a) (integration restriction) and 502(d) (resale limitations) of Regulation D are satisfied.
The amendments preserve the ability of issuers to conduct Rule 506 offerings without the use of general solicitation and general advertising under existing Rule 506(b) for those issuers that either do not wish to engage in general solicitation and general advertising in their Rule 506 offerings (and therefore become subject to the new verification requirements) or that wish to sell privately to non-accredited investors who meet Rule 506(b)’s sophistication requirements.
For an ongoing offering under Rule 506 that commenced before the effective date of Rule 506(c), the issuer may choose to continue the offering after the effective date in accordance with the requirements of either Rule 506(b) or Rule 506(c). If an issuer chooses to continue the offering in accordance with the requirements of Rule 506(c), any general solicitation that occurs after the effective date will not affect the exempt status of offers and sales of securities that occurred prior to the effective date in reliance on Rule 506(b).
Verification of Accredited Investor Status
Under the final amendments to the Rule, whether the steps taken by an issuer to verify that all purchasers are accredited investors are “reasonable” is an objective determination, based on the particular facts and circumstances of each purchaser and transaction. Under the stated purpose of providing flexibility, the Rule neither mandates a specific verification method nor lists an exclusive series of acceptable ones. Under the final amendments to the Rule, issuers must weigh a number of factors when determining the reasonableness of the steps taken to verify that a purchaser is an accredited investor. However, in response to a number of comments received on the proposing release requesting additional certainty with respect to satisfying the verification requirement, the final Rule includes a non-exclusive list of methods that issuers may use to verify the accredited investor status of natural persons. The final release provides the following examples of factors that an issuer might consider:
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the nature of the purchaser and the type of accredited investor that the purchaser claims to be;
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the amount and type of information that the issuer has about the purchaser; and
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the nature of the offering, such as the manner in which the purchaser is solicited to participate in the offering, and the terms of the offering, such as a minimum investment amount.
Nature of the Purchaser
The definition of “accredited investor” includes natural persons and entities that fall within certain categories, or that the issuer reasonably believes fall within one of those categories, at the time of the sale of securities to that natural person or entity. For example, purchasers may be accredited investors based on their status (such as a registered broker or dealer), a combination of their status and the amount of their total assets (such as a corporation not formed to acquire the securities offered with total assets in excess of $5 million), and natural persons on the basis of either their net worth or their annual income.
The final release indicates that what constitutes reasonable verification of whether a purchaser is an accredited investor will likely vary depending on the type of accredited investor that the purchaser claims to be. For example, the steps that may be reasonable to verify that an entity is an accredited investor by virtue of being a registered broker-dealer (such as by going to FINRA’s BrokerCheck website) will necessarily differ from the steps that will be reasonable to verify whether a natural person is an accredited investor. The final release acknowledges that taking reasonable steps to verify the accredited investor status of natural persons poses greater practical difficulties as compared to other categories of accredited investors and that these practical difficulties may be exacerbated by natural persons’ privacy concerns about the disclosure of personal financial information. The final release also acknowledges that it may be more difficult for an issuer to obtain information about a natural person’s assets and liabilities than information about a natural person’s annual income.
The question of what type of information will be sufficient to constitute reasonable steps to verify accredited investor status under the particular facts and circumstances of each purchaser also will depend on other factors described below.
Information about the Purchaser
The amount and type of information that an issuer has about a purchaser will be a significant factor in determining what additional steps will be reasonable to verify the purchaser’s accredited investor status. The more information an issuer has indicating that a prospective purchaser is an accredited investor, the fewer steps it will have to take, and vice versa. If an issuer has actual knowledge that the purchaser is an accredited investor, then the issuer will not have to take any additional steps. Examples of the types of information that issuers can review or rely upon – any of which might, depending on the circumstances, in and of themselves constitute reasonable steps to verify a purchaser’s accredited investor status – include, without limitation:
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Publicly available information in filings with a federal, state or local regulatory body. For example:
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the purchaser is a named executive officer of an Exchange Act registrant, and the registrant’s proxy statement discloses the purchaser’s compensation; or
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the purchaser claims to be an Internal Revenue Code Section 501(c)(3) organization with $5 million in assets, and the organization’s Form 990 series return filed with the Internal Revenue Service (which such an organization is required to make public) discloses the organization’s total assets; or
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Third-party information that provides reasonably reliable evidence that a person falls within one of the enumerated categories in the accredited investor definition such as:
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the purchaser is a natural person and provides copies of pay stubs for the two most recent years and the current year; or
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specific information about the average compensation earned at the purchaser’s workplace by persons at the level of the purchaser’s seniority is publicly available; or
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Verification of a person’s status as an accredited investor by a third party, such as a broker-dealer, attorney or accountant, provided that the issuer has a reasonable basis to rely on such third-party verification.
Nature of the Offering
The nature of the offering, such as the means by which the issuer publicly solicits purchasers, may be relevant in determining the reasonableness of the steps taken to verify accredited investor status. An issuer that solicits new investors through a website or other means accessible to the general public will likely be obligated to take greater measures to verify accredited investor status than an issuer that solicits new investors from a database of pre-screened accredited investors created and maintained by a reasonably reliable third party, such as a registered broker-dealer. In the former type of offering, an issuer will not have taken reasonable steps to verify accredited investor status if it requires only that a person check a box in a questionnaire or sign a form, without other information about the purchaser indicating accredited investor status. In the latter type of offering, an issuer will be entitled to rely on a third party that has verified a person’s status as an accredited investor, provided that the issuer has a reasonable basis to rely on such third-party verification.
Terms of the Offering
The terms of the offering also will affect whether the verification methods used by the issuer are reasonable. For example, the ability of a purchaser to satisfy a high minimum investment amount requirement in cash that only accredited investors could reasonably be expected to meet could be taken into consideration in verifying accredited investor status.
Non-Exclusive Methods of Verifying Accredited Investor Status
In addition to adopting a principles-based method of verification, and in response to concerns regarding lack of certainty raised by commenters on the proposing release, the SEC included in Rule 506(c) four specific non-exclusive methods of verifying accredited investor status for natural persons that, if used, are deemed to satisfy the verification requirement in Rule 506(c). None of these methods, however, are deemed to satisfy the verification requirement if the issuer or its agent has knowledge that the purchaser is not an accredited investor. Issuers are not required to use any of the methods in the non-exclusive list, and can apply the reasonableness standard directly to the specific facts and circumstances presented by the offering and the investors.
The non-exclusive list of methods that issuers may use to verify the accredited investor status of natural persons is as follows:
1. In verifying whether a natural person is an accredited investor on the basis of income, an issuer is deemed to satisfy the verification requirement in Rule 506(c) by reviewing copies of any Internal Revenue Service (“IRS”) form that reports income for the most recent years, including, but not limited to:
a Form W-2 (“Wage and Tax Statement”), a Form 1099 (report of various types of income), a Schedule K-1 of Form 1065 (“Partner’s Share of Income, Deductions, Credits, etc.”) and a copy of a filed Form 1040 (“U.S. Individual Income Tax Return”),each for the two most recent years, along with obtaining a written representation from that person that he or she has a reasonable expectation of reaching the income level necessary to qualify as an accredited investor during the current year. In the case of a person who qualifies as an accredited investor based on joint income with that person’s spouse, an issuer will be deemed to satisfy the verification requirement in Rule 506(c) by reviewing copies of these forms for the two most recent years in regard to, and obtaining written representations from, both the person and the spouse.
2. In verifying whether a natural person is an accredited investor on the basis of net worth, an issuer is deemed to satisfy the verification requirement in Rule 506(c) by reviewing one or more of the following types of documentation, dated within the prior three months, and by obtaining a written representation from that person that all liabilities necessary to make a determination of net worth have been disclosed:
For assets:
bank statements; brokerage statements and other statements of securities holdings; certificates of deposit; and tax assessments and appraisal reports issued by independent third parties. For liabilities:
a consumer report (also known as a credit report) from at least one of the nationwide consumer reporting agencies.In the case of a person who qualifies as an accredited investor based on joint net worth with that person’s spouse, an issuer will be deemed to satisfy the verification requirement in Rule 506(c) by reviewing such documentation in regard to, and obtaining representations from, both the person and the spouse.
3. An issuer is deemed to satisfy the verification requirement in Rule 506(c) by obtaining a written confirmation from a registered broker-dealer, an SEC-registered investment adviser, a licensed attorney or a certified public accountant that such person or entity has taken reasonable steps to verify that the purchaser is an accredited investor within the prior three months and has determined that such purchaser is an accredited investor. While third-party confirmation by one of these parties will be deemed to satisfy the verification requirement in Rule 506(c), depending on the circumstances, an issuer may be entitled to rely on the verification of accredited investor status by a person or entity other than one of these parties, provided that any such third party takes reasonable steps to verify that purchasers are accredited investors and has determined that such purchasers are accredited investors and the issuer has a reasonable basis to rely on such verification.
4. With respect to any natural person who invested in an issuer’s Rule 506(b) offering as an accredited investor prior to the effective date of Rule 506(c) and remains an investor of the issuer, for any Rule 506(c) offering conducted by the same issuer, the issuer is deemed to satisfy the verification requirement in Rule 506(c) with respect to any such person by obtaining a certification by such person at the time of sale that he or she qualifies as an accredited investor.
Factors Interconnected
If, after consideration of the facts and circumstances of the purchaser and of the transaction, it appears likely that a person qualifies as an accredited investor, the issuer will have to take fewer steps to verify accredited investor status, and vice versa. For example, if an issuer knows little about a potential purchaser claiming accredited investor status under one of the natural person categories, but the terms of the offering require a high minimum investment amount, then it may be reasonable for the issuer to take no steps to verify accredited investor status other than to confirm that the purchaser’s cash investment is not being financed by the issuer or by a third party (provided there are no facts indicating that the purchaser is not an accredited investor).
Reasonable Belief Standard
The SEC confirmed that its rulemaking will not eliminate the use of the “reasonable belief” standard found in Rule 501(a) (definition of “accredited investor”) when determining whether a purchaser is an accredited investor. The SEC’s affirmation of the ability of an issuer to rely on the reasonable belief standard is significant because it means that a Rule 506 offering relying on the exemption in Rule 506(c) will not be invalidated if a purchaser is not, in fact, an accredited investor so long as the issuer took reasonable steps to verify that the purchaser’s accredited investor status. For example, if an issuer takes reasonable steps to verify a purchaser’s accredited investor status and has a reasonable belief that the purchaser is an accredited investor as a result of such reasonable steps, the issuer will not lose the ability to rely on the Rule 506 exemption as a result of the purchaser providing false information or documentation to the issuer as part of that verification.
Form D Amendments
The final rules also revise Form D to add a separate check box for issuers to indicate whether they used general solicitation or general advertising in a Rule 506 offering. The SEC stated in the final release that the additional information will help them in looking into the effectiveness of the practices that develop to satisfy the verification requirement to identify and exclude non-accredited investors from participating in Rule 506(c) offerings.
Retention of Records Documenting Verification
It will be important for issuers to retain adequate records that document the particular steps taken to verify that a purchaser is an accredited investor, as an issuer claiming an exemption from the registration requirements of the Securities Act has the burden of showing that it is entitled to rely on that exemption.
Effect on Private Fund Exemptions under the Investment Company Act
Private funds generally rely on one of two exclusions from the definition of “investment company” under the Investment Company Act to exclude them from the regulatory provisions of that Act. Private funds are precluded from relying on either of these two exclusions if they make a public offering of their securities. The final release confirms that the amendments will permit private funds to use general solicitation or general advertising in a Rule 506(c) offering without losing either of the exclusions under the Investment Company Act.
Amendments to the Qualified Institutional Buyer Exemption under Rule 144A
The amendment to Rule 144A provides that securities may be offered pursuant to Rule 144A to persons other than qualified institutional buyers, including by means of general solicitation and general advertising, provided that the securities are sold only to persons that the seller and any person acting on behalf of the seller reasonably believe are qualified institutional buyers. Rule 144A already provides a list of non-exclusive methods of establishing a prospective purchaser’s ownership and discretionary investments of securities for purposes of determining whether the prospective purchaser is a qualified institutional buyer.
For an ongoing Rule 144A offering that commenced before the effective date of the amendment to Rule 144A, offering participants will be entitled to conduct the portion of the offering following the effective date of the amendment to Rule 144A using general solicitation, without affecting the availability of Rule 144A for the portion of the offering that occurred prior to the effective date of the amended rule.
Integration with Offshore Offerings
Regulation S provides a safe harbor for offers and sales of securities outside the United States and includes an issuer and a resale safe harbor. One of the requirements for both of these Regulation S safe harbors is that there be no directed selling efforts in the United States. Often, a U.S. or foreign issuer will conduct concurrent offerings in which the U.S. offering is conducted under Rule 506 or Rule 144A and the foreign offering is conducted under Regulation S. The SEC confirmed in its final release that a concurrent offshore offering conducted in compliance with Regulation S will not be integrated with a domestic offering using general solicitation or general advertising conducted in compliance with Rule 506 or Rule 144A, as amended.
Bad Actor Disqualification
Covered Persons
The rule amendments add new Rule 506(d) which provides that the following “covered persons” could disqualify an issuer from relying on Rule 506 if they are the subject of a disqualifying event:
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the issuer and any predecessor of the issuer or affiliated issuer;
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any director, executive officer, officer participating in the offering, general partner or managing member of the issuer;
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any beneficial owner of 20% or more of the issuer’s outstanding voting equity securities, calculated on the basis of voting power;
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any promoter connected with the issuer in any capacity at the time of the sale;
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any investment manager to an issuer that is a pooled investment fund and any director, executive officer, other officer participating in the offering, general partner or managing member of any such investment manager, as well as any director, executive officer or officer participating in the offering of any such general partner or managing member;
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any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with sales of securities in the offering (a “compensated solicitor”); and
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any director, executive officer, other officer participating in the offering, general partner, or managing member of any such compensated solicitor.
Whether an officer participates in an offering will be a question of fact, with participation requiring more than transitory or incidental involvement. Participation could include activities such as participation or involvement in due diligence activities, involvement in the preparation of disclosure documents, and communication with the issuer, prospective investors or other offering participants.
Disqualifying Events
The disqualification will apply if a covered person is subject to the following “disqualifying events”:
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criminal convictions within ten years before the sale of securities (or five years, in the case of issuers, their predecessors and affiliated issuers);
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court orders entered within five years before the sale of securities, that, at the time of such sale, restrains or enjoins such person from engaging or continuing to engage in such conduct or practice;
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in each case (A) in connection with the purchase or sale of any security; (B) involving the making of any false filing with the SEC; or (C) arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities;
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final orders of certain state regulators (such as state securities, banking and insurance regulators) and certain federal regulators, if the order is based on fraudulent, manipulative or deceptive conduct within ten years before the sale of the securities for so long as such orders are in effect;
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certain SEC disciplinary orders relating to brokers, dealers, municipal securities dealers, investment advisers and investment companies and their associated persons for so long as such orders are in effect;
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SEC cease and desist orders within five years before the sale of securities for scienter-based anti-fraud violations and Section 5 registration violations;
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suspension or expulsion from membership in, or suspension or bar from associating with a member of, a securities self-regulatory organization for the duration of the suspension or expulsion;
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SEC stop orders and orders suspending a Regulation A exemption issued within five years before such sale, or investigations in respect of such orders ongoing at the time of the sale; and
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U.S. Postal Service false representation orders entered within five years before such sale, or a temporary restraining order or preliminary injunction with respect to conduct alleged to have violated the false representation statute that applies to U.S. mail.
Reasonable Care Exception
To clarify the issuer’s obligations under the new Rule 506(d), the rule amendments provide a “reasonable care” exception, under which an issuer would not lose the benefit of the Rule 506 safe harbor, despite the existence of a disqualifying event, if it can show that it did not know and, in the exercise of reasonable care, could not have known of the disqualification. To establish reasonable care, the issuer would be expected to conduct a factual inquiry with respect to the relevant covered persons, the nature and extent of which would depend on the facts and circumstances of the situation.
Waivers
The SEC may grant a waiver if it determines that the issuer has shown good cause that it is not necessary under the circumstances that the registration exemption be denied. The SEC identified a number of circumstances that could, depending on the specific facts, be relevant to the evaluation of a waiver request, including change of control, change of supervisory personnel, absence of notice and opportunity for hearing, and relief from a permanent bar for a person who does not intend to apply to reassociate with a regulated entity.
Transition Matters and Disclosure of Disqualifying Events
All sales made under Rule 506 after the effective date of the amendments would be subject to the disqualification provisions. Under new Rule 506(e), disqualifying events that occurred before the effective date of the rule amendments will not result in disqualification provided that disclosure to investors regarding such events is provided. Issuers must give reasonable prominence to the disclosure to ensure that information about pre-existing bad actor events is appropriately presented in the total mix of information available to investors, and must provide such information a reasonable time prior to sale.
The final release indicates that if the disclosure is required and not adequately provided to an investor, relief will not be available under Rule 508, under which “insignificant deviations” from Regulation D requirements do not necessarily result in loss of the exemption with regard to an offer or sale of securities to a particular individual or entity. However, the failure to furnish the required disclosure on a timely basis will not prevent an issuer from relying on Rule 506 if the issuer establishes that it did not know, and in the exercise of reasonable care could not have known, of the existence of the undisclosed disqualifying events.
Sales of securities made before the effective date will not be affected by any disqualification or disclosure requirement, even if such sales are part of an offering that continues after the effective date. Disqualifying events that occur while an offering is underway will be treated in a similar fashion. Sales made before the occurrence of the disqualifying event will not be affected by the disqualifying event, but sales made afterward will not be entitled to rely on Rule 506 unless the disqualification is waived or removed, or, if the issuer is not aware of a disqualifying event, the issuer can rely on the reasonable care exception.
Amendment to Form D
Under the rule amendments, the signature block of Form D will now contain a certification confirming that the offering is not disqualified from reliance on Rule 506 for one of the reasons stated in Rule 506(d).
Monitoring of Rule 506 Offerings
The proposed changes to Regulation D are intended to help the SEC monitor Rule 506 offerings now that the ban on general solicitation and general advertising has been lifted. These proposed changes include the following:
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expanding the information issuers must include on Form D;
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requiring issuers to file a Form D at least 15 days before any general solicitation or general advertising begins;
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requiring certain legends and other disclosures in general solicitation and general advertising materials;
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temporarily requiring issuers to submit written general solicitation and general advertising materials to the SEC;
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requiring issuers to file an amendment to the Form D when an offering is completed;
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disqualifying an issuer from relying on Rule 506 for one year for future offerings if the issuer, or any predecessor or affiliate of the issuer, did not comply, within the last five years, with Form D filing requirements in a Rule 506 offering; and
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requiring private funds to comply with Securities Act Rule 156 guidance regarding the sales literature, which previously only applied to public funds.
There is a 60-day period for comments with respect to this proposal before a final rule will be considered by the SEC.
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