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SEC Lifts Prohibition on General Solicitation and Adopts Bad Actor Disqualifications

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September 9, 2013
Client Alert

The Securities and Exchange Commission recently lifted the longstanding prohibition against using general solicitation and general advertising in certain private offerings of securities, as mandated by the Jumpstart Our Business Startups Act. Rule 506(c) allows issuers, including private funds, to use public media, such as newspapers, television and the Internet to advertise private securities offerings, as long as: (i) all purchasers of securities are accredited investors; (ii) the issuer takes “reasonable steps” to verify the accreditation of all purchasers; and (iii) all other applicable terms and conditions of Regulation D are satisfied.

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