On May 25th, the SEC published for comment a proposed rule to implement the Dodd-Frank Act's requirement to prohibit certain securities offerings from qualifying for exemption from registration if they involve certain "felons and other bad actors." Regulation D under the Securities Act provides three exemptions that a company can use to avoid registration, the most widely used of which is Rule 506. If an offering qualifies for the Rule 506 exemption, an issuer can raise unlimited capital from an unlimited number of accredited investors and up to 35 non-accredited investors. Under the proposed rule, an offering would be unable to rely on the Rule 506 exemption if the issuer or any other person covered by the rule had a "disqualifying event" such as a criminal conviction, court injunction, or restraining order. The proposing release includes a specific request for comments on whether the disqualification provision should apply to other offering exemptions. Comments should be submitted on or before July 14, 2011. SEC Press Release. SEC Commissioner Troy A. Paredes dissented from approving the proposed rule for publication. Although he supports the policy of the rule, he objected to the rule's retroactive effect. Paredes Remarks.