SEC Adopts Rule to Permit General Advertising in Connection with Private Placements

July 19, 2013

The Jumpstart Our Business Startups (JOBS) Act required the SEC to change its rules so that advertising will be permitted in certain private placements. This change has the potential to significantly alter the manner in which money is raised for start-ups, operating businesses and private funds.

The SEC adopted these changes to Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933 on July 10, 2013.

The changes as adopted are very similar to the changes that were proposed in August 2012, except that the SEC has added a nonexclusive “safe harbor” for verification of accredited investor status of natural persons.

These changes will become effective 60 days from the publication of the adopting release in the Federal Register; in other words, in mid-September 2013.

To read the Executive Summary and access the white paper on the proposed SEC rule changes, please click here.