As we’ve previously blogged, in July 2013 the SEC adopted rules that permit general solicitation and general advertising in connection with certain offerings of securities to accredited investors. Yesterday, to help the markets understand some common interpretative questions associated with these new rules, the SEC issued several new Compliance and Disclosure Interpretations. The new interpretations mainly address:
- when and how companies may switch between “old” Rule 506(b) (no general solicitation) and new 506(c) (general solicitation permitted),
- the need to amend Form D if such changes are made,
- the new Rule 506(c) exemption not being ruined by the subsequent discovery that an investor was not accredited, if the issuer had a reasonable belief the investor was accredited at the time of sale,
- and accredited investor verification issues.
The relevant interpretations are in Questions 260.05 through 260.13 — those of you following general solicitation of accredited investors may want to check it out.
There are also two new interpretations relating to Rule 144A (which now permits offering securities to persons other than “qualified institutional buyers,” or QIBs, by means of general solicitation if all sales are to QIBs), which are at Questions 138.03 and 138.04.
As this new and emerging area of law continues to mature, we’ll keep you posted on interesting updates.