Switching to Advertising the Offering – SEC Guidance

The SEC recently gave guidance on a couple of transition matters:

  • If you started a private placement without general solicitation before September 23, 2013, then switch to advertising the offering after that date do you have to take “reasonable steps to verify” the accredited investor status of investors who purchased securities in the offering before the issuer conducted the offering using general solicitation?

The SEC says no. But you will have to do so  for those who purchased after the       offering switched to advertising.

  • If you start a private placement before September 23, 2013, did no advertising and made sales either before or after that date in reliance on the exemption but now want to continue the offering using advertising, can you switch from Rule 506(b) to Rule 506(c) if you already sold securities to non-accredited investors before relying on the Rule 506(c) exemption?

    The SEC says “yes,” as long as all sales of securities in the offering after the issuer begins to offer and sell in reliance on Rule 506(c) are limited to accredited investors and the issuer takes reasonable steps to verify the accredited investor status of those purchasers.

About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at: http://www.linkedin.com/pub/jeffrey-a-koeppel/0/63/5a9
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