SEC© Issues 11 C&Dis on Rule 144A and Rule 506(c)

Morrison Foerster
Author: Nilene Evans

On November 13^th, 2013, the SEC© issued 11 new Compliance & Disclosure Interpretations regarding Rule 144A and Rule 506(c).

For our reader’s convenience, we have put the 11 new C&Dis in their own document.  The two new Rule 144A C&Dis confirm that initial purchasers as well as issuers may engage in general solicitation and that, as provided in the adopting release, Rule 144A general solicitation does not change how directed selling efforts under Regulation S are analyzed.

Here is a preview of the nine new Rule 506(c) C&DIs address:

• Filing requirements for a Form D for a Rule 506(b) offering commenced before September 23, 2013, the effective date for the new Rule 506(c) exemption, when the issuer proposes to change to a Rule 506(c) offering;
• Issues surrounding reasonable steps to verify accredited investor status, including:
  • the issuer can still sell to an investor if the issuer took reasonable steps to determine accredited investor status and had a reasonable belief that the investor was an accredited investor and afterwards discovers that the investor was not an accredited investor at the time of sale;

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