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There has been a lot of hype about the benefits of lifting the ban on general solicitation/advertising in securities offerings, however, the SEC’s proposed rules and the harsh penalties that go along with them may drastically reduce the benefits of lifting the ban in the first place. As one commentator put it, the SEC is killing the new rule with a death by 1000 cuts.
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Controversial Requirements of SEC’s Proposed Changes toForm D | BizTaxBuzz by Trevor Crow
biztaxbuzz.com /bizlaw/controversial-requirements-secs-proposed-changes-f orm-d/
1stOctoberControversial Requirements of SEC’s ProposedChanges to Form D
Posted by Trevor Crow
The proposed Form D rules have many controversial implications. Some of the most controversial requirements of theproposed rule are:
(1) Requirement that a Form D be filed 15 days before any general advertisement;
(2) Requirement to file the general advertising materials with the SEC;
(3) Requirement to include certain legends on general advertisement materials;
(4) Requirement to file an amendment to Form D when the offering is complete; and
(5) Severe penalties for failing to make the above Form D filings including a ban on additional Reg. D offerings for oneyear after the company corrected the problem.
Bottom Line: There has been a lot of hype about the benefits of lifting the ban on general solicitation/advertising insecurities offerings, however, the SEC’s proposed rules and the harsh penalties that go along with them may drasticallyreduce the benefits of lifting the ban in the first place. As one commentator put it, the SEC is killing the new rule with adeath by 1000 cuts.
