Securities regulations are complicated and when new rules are adopted or proposed by the SEC it may be difficult for reporters and the public to grasp exactly what has happened. In the wake of the Jobs Act Title II rules going into effect on September 23rd, there have been numerous articles and blogs highlighting both the lifting of the ban on general solicitation for 506(c) offerings, and a new requirement to file a Form D 15 days in advance of any general solicitations as the main changes issuers should keep in mind. However, only one of these is true. Because the 15 day advanced filing requirement for general solicitation is a proposed rule, while the lifting of the ban on general solicitation in 506(c) offerings is an adopted rule, the former is NOT in effect right now.
At this moment, the 15 day advanced filing requirement is subject to a comment period. The comment period technically ended Monday, but as discussed at a recent meeting of the advisory committee on small and emerging companies, more people are wanting to comment and the SEC never ignores comment letters that are a few days late. The fact is that these proposed rules may never even go into effect and may be withdrawn by the Commission, due to the massive amount of negativity they are drawing on the SEC’s comment board. The amount of comments is nearing 400 with as few as 20 of them in favor of adopting the rules. Furthermore if the SEC was to move to adopt these rules, they would have to churn through SEC staff for months before we would ever see them presented to the Commissioners for voting.
So remember that if you see any articles, blogs or infographics saying that the 15 day advanced filing period for general solicitations on 506(c) offerings is in effect, ignore them or better yet comment and ask the author to alter their article and help stop the spread of misinformation.
Click here to view CrowdCheck’s memo on Jobs Act Title II Rules and lifting the ban on general solicitation.
Click here to view CrowdCheck's comment letter on the SEC proposed rules.