The SEC recently issued proposals related to Regulation D which, among other things, require a Form D to be filed fifteen days before a general solicitation under Rule 506(c) can commence. Two Congressmen recently sent a letter to SEC Chair Mary Jo White claiming the provision effectively violates the JOBS Act. According to the letter “Proposed Rule 503 requires a fifteen day waiting period, after filing Form D, before allowing advertisements – this restriction appears to violate the law by imposing a fifteen day ban on general solicitation. Title II of the JOBS Act lifted the ban on general solicitation for Regulation D 506 offerings to accredited investors. As a result, the Form D pre-filing requirement effectively violates Title II of the JOBS Act.”
The letter also object to filing solicitation materials: “Additionally, the proposed Rule 510T will require that for the first two years during which the proposed rule is in place, issuers must provide the Commission with all advertisements by the date of first use. Problems clearly exist with the imposition of this same-day or virtually “real-time” compliance requirement on an enormous market of small issuers that, prior to public advertising, have already raised nearly one trillion dollars per year. To the extent the disclosure of advertisements Under Rule 510T supports analytical or market evaluation needs, samples of data should clearly suffice, yet the Commission seeks the entire population of advertising information on a same-day basis for two years – as a result, market analysis alone cannot realistically explain the imposition of this heavy burden.”
For more information on the topic, see JOBS Act and Other Securities Law Essentials for Growing Companies.