SEC Issues Guidance On Bad Actor Rules

On December 4, 2013, the Division of Corporation Finance (the "Division") of the U.S. Securities and Exchange Commission (the "SEC") issued new Compliance and Disclosure Interpretations ("CDIs") concerning the recently adopted "bad actor" rules. These rules, including new Rules 506(d) and 506(e) under the Securities Act of 1933 (the "Securities Act"), became effective on September 23, 2013, and codified certain rulemaking mandated by Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The new guidance will be of interest to any issuer, including private funds, offering interests in reliance on the safe harbors provided by Rule 506 of Regulation D (these issuers will include most hedge funds, private equity funds, and other private funds offered to U.S. investors).