SEC Eases Publicity Restrictions For Some Private Placements, But With Strings Attached

The Jumpstart Our Business Startups Act (JOBS Act) was intended to stimulate the growth of small businesses by relaxing a number of requirements and restrictions under U.S. federal securities laws. One of the most potentially significant changes called for by the JOBS Act was the requirement it imposed on the U.S. Securities Exchange Commission (SEC) to adopt rules eliminating the prohibition on general solicitation and general advertising in certain types of private placement offerings.

In response to that requirement, on July 10, 2013, the SEC did the following:

• Adopted rules amending Rule 144A under the U.S. Securities Act of 1933 (U.S. Securities Act) to allow offers to be made without restriction so long as all ultimate purchasers are reasonably believed to be qualified institutional buyers (Rule 144A Amendment).