SEC Proposes Amendments To Permit General Solicitation In Securities Offerings

Amendments to Rules 506 and 144A required by the JOBS Act

On August 29, 2012 the SEC proposed amendments to Rules 506 and 144A under the Securities Act of 1933 that would permit general solicitation and general advertising in securities offerings under these exemptions from securities registration. The proposal implements a provision of the JOBS Act that requires the SEC to amend these rules. The exemptions from registration under these rules are available to both publicly traded and private companies, both domestic and foreign.

Background

Prior to the amendments called for by the JOBS Act, Rule 506 permitted a company to offer and sell, in a private placement, an unlimited amount of securities to an unlimited number of accredited investors and to no more than 35 non-accredited investors who satisfied certain "sophistication" requirements (which could be met with the help of an advisor). The availability of this exemption from registration was subject to a number