iIn a recently issued Compliance & Disclosure Interpretation (Question #260.21), the SEC staff unequivocally stated that “bad actor” disqualification under Rule 506(d)(1)(v) is “triggered only by orders to cease and desist from violations of scienter-based provisions of the federal securities laws, including scienter-based rules.” In Kid, Did You Ever Go To Court?, I questioned whether the list of scienter based-based securities laws and regulations was readily or generally known. Recently, I came across the following non-exclusive list of scienter-based provisions:
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Section 10(b) of the Exchange Act and Rule 10b-5 thereunder;
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Section 17(a)(1) of the Securities Act;
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Section 15(c)(1) of the Exchange Act; and
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Section 206(1) of the Advisers Act.
Division of Corporation Finance, Statement on Well-Known Seasoned Issuer Waivers (July 8, 2011) at n. 6. The staff identified the following sections as non-scienter based:
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Sections 17(a)(2) and (3) of the Securities Act;
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Section 14(a) of the Exchange Act and Rule 14a-9 thereunder;
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Sections 206(2) and 206(4) of the Advisers Act; and
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Section 34(b) of Investment Company Act.
