The Value Of Relationships

Maybe, given that we're living in the age of social media with Facebook "friends" and LinkedIn contacts, it shouldn't be all that surprising that the value of relationships may appear to have diminished.  In fact, in many discussions with clients about Rule 506(b) and Rule 506(c), conversations seem to assume that the principles of "preexisting relationships" have fallen by the wayside.

The preexisting relationship doctrine has not been eliminated by the JOBS Act or new Rule 506(c) and should remain an important consideration for issuers and their advisers when thinking about private placements and general solicitation.  Going back to basics, if one returns to the statutory private placement exemption (Section 4(a)(2)), an exempt offering has been understood to be an offering to a limited number of financially sophisticated offerees with access to information about the issuer that have some relationship to each other and to the issuer and in which no general