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July 26, 2014

Securities and Exchange Commission (SEC) Proposes Additional Amendments to Form D, Regulation D and Rule 156 Under the Securities Act

In connection with the final amendments adopted to Rule 506, the SEC proposed additional amendments to Form D, Regulation D and Rule 156 under the Securities Act to allow it to monitor Rule 506 offerings and to address issues that arise in connection with allowing general solicitation and general advertising for such offerings. Specifically, the SEC proposed to increase the informational requirements of Form D by amending several items and adding new items. The SEC proposed to require filing of Form D no later than 15 days prior to the first use of general solicitation in a Rule 506 offering and filing of a closing Form D amendment no later than 30 days after the termination of a Rule 506 offering. Also, the signature block on Form D would be revised to include a certification by issuers that the offering is not disqualified from reliance on Rule 506.

In addition to the proposed changes to Form D, the SEC proposed further amendments to Regulation D, including:

  • an amendment to Rule 507 to disqualify an issuer from relying on Rule 506 for one year if the issuer, or any predecessor or affiliate of the issuer did not comply within the last five years with all of the Form D filing requirements for a Rule 506 offering;
  • new Rule 509 to require issuers to include prescribed legends in any general solicitation materials informing potential investors as to whether they are qualified to participate in the offering, the type of offering being conducted and the risks associated with the offering. Private funds also would be required to include a legend disclosing that securities being offered are not subject to the 1940 Act and to include additional disclosures in solicitation materials that include performance data. New Rule 509 would disqualify an issuer from relying on Rule 506 if such issuer or its predecessor has been subject to a court order enjoining it for failure to comply with Rule 509; and
  • new Rule 510T to require issuers to temporarily submit their general solicitation materials to the SEC on a non-public basis.

Finally, the SEC proposed to amend Rule 156 under the Securities Act (the rule applicable to investment company sales literature) to apply to sales literature used by private funds in Rule 506 offerings.

Comments on the proposed amendments are due by November 4, 2013.

© 2014 Vedder Price

About the Author

Vedder Price P.C. attorneys provide a full range of services to a diverse financial services clientele. Attorneys practicing in the firm’s Investment Services Group are experienced in all aspects of investment company and investment adviser securities regulations, broker-dealer regulatory and compliance matters, derivatives and financial product matters, and ERISA and tax matters. Clients include mutual fund complexes, hedge and other private funds, money managers, broker-dealers, independent directors, and many other types of institutions such as banks, savings and...

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