Client Alert

SEC Eliminates Prohibition Against General Solicitation and Advertising in Rule 506 and Rule 144A Offerings

July 12, 2013


On July 10, 2013, the SEC adopted its long-awaited rules to eliminate the prohibition against general solicitation and advertising in securities offerings made pursuant to Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933. The elimination of the prohibition on general solicitation and advertising will make it easier for domestic and foreign companies and private investment funds to raise capital from accredited investors and qualified institutional buyers. Issuers and their broker–dealer intermediaries will be able to expand the universe of investors to whom they can offer their securities beyond the inherently limited group of investors with whom they already have a prior substantive relationship and will even be able to engage in crowdfunding type offerings online through publicly accessible internet websites and other mass communication media.

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