SEC Allows Public Advertising and Raises Due Diligence Bar on Private Securities Offerings
On July 10, 2013, the Securities and Exchange Commission (SEC) issued final rules (the "New Rules") that: - Reverse its long standing ban on public advertising of private securities offerings, - Implement new reporting, notice and disclosure requirements for private offerings, and - Require issuers to perform due diligence for, and restrict the involvement of, felons and certain securities law violators ("bad actors") from being inside the issuer and part of its offering team, or lose their exemption from registration. In addition, on the same day, the SEC issued proposed rules (the "Proposed Rules") that would implement new reporting, notice and disclosure requirements for issuers in private offerings under Regulation D. Both developments took place in light of legislative mandates under the JOBS Act and the Dodd-Frank Act. The New Rules make several important changes to the SEC rules applicable to the private sale of securities and take effect sixty days after the New Rules are published in the Federal Register (which will likely run into middle or late September). Consequently, issuers may not rely on the New Rules until they become effective. Parties are invited to comment on the Proposed Rules for sixty days after they are published in the Federal Register. To read the full Law Alert, please click here.