Before You Start That General Solicitation…

This week, the SEC approved long-awaited amendments relaxing the prohibition against general solicitation, as required under Title II of the JOBS Act.  These amendments will liberalize the ability of broker-dealers to advertise and market private placements by removing the prohibition against general solicitation in offerings conducted pursuant to new Rule 506(c).  However, following the effective date, broker-dealers looking to avail themselves of the new general solicitation rules should be mindful of existing FINRA rules that govern offering-related communications.

FINRA Rule 5123 establishes filing requirements for offering documents used in private placements. Under Rule 5123, FINRA members selling securities issued by non-members in a private placement must file the private placement memorandum, term sheet or other offering documents with FINRA within 15 days of the date of the first sale of securities, or indicate that no such offering documents were used. For