In a recently issued Compliance & Disclosure Interpretation (Question #260.21), the SEC staff unequivocally stated that 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.”  Quick, list all of the scienter-based federal securities laws and rules.  I can’t.  If there’s a list out there, I haven’t seen it.  If you have one and are of a generous spirit, please send it.  The C&DI provides some very limited help by identifying one non scienter-based rule, Rule 105 (governing short selling in connection with a public offering).

The point is that Rule 506 isn’t intended only for large issuers that can afford sophisticated securities counsel.  It is an exemption that should be accessible to small businesses.  The “bad actor” rules are so technical that small businesses are as likely to be victimized by the rule as benefited.


This past September, I made a reference to Aristophanes’ comedy, Ecclesiazusae, in this post.  This past weekend, I was able to see a production of the play at UCLA.  The play, whether in the original Greek or in translation, is too bawdy for children or those who are offended by the scatological or sexual.  Nonetheless, it is surprisingly modern and Aristophanes includes some chestnuts that work as well today as in 392 B.C.E.:

Only look at the laws they pass and it’s obvious they’d never pass such things unless very drunk.

(Translated by Jack Lindsay).  The play also includes the longest word in ancient Greek and the longest word ever used in a literary work:

λοπαδοτεμαχοσελαχογαλεοκρανιολειψανοδριμυποτριμματοσιλφιοτυρομελιτοκατακεχυμενοκιχλεπικοσσυφοφαττοπεριστεραλεκτρυονοπτεκεφαλλιοκιγκλοπελειολαγῳοσιραιοβαφητραγανοπτερυγών (Lopado­­temacho­­selacho­­galeo­­kranio­­leipsano­­drim­­hypo­­trimmato­­silphio­­parao­­melito­­katakechy­­meno­­kichl­­epi­­kossypho­­phatto­­perister­­alektryon­­opte­­kephallio­­kigklo­­peleio­­lagoio­­siraio­­baphe­­tragano­­pterygon)