The SEC yesterday proposed rules to permit general solicitation and general advertising in Rule 506 and Rule 144A offerings. A main requirement is that the issuer “takes reasonable steps to verify” that the purchasers are accredited investors. The model the SEC has proposed would neither mandate specific verification steps nor assure issuers and investors that adequate steps have been taken. The model will likely require issuers to obtain reliable third party information most of the time, rather than relying on questionnaires, contractual representations, or similar confirmations from a purchaser.

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