In a statement made by Mary Schapiro, Chairman of the SEC, the possibility of removing the current prohibition against general solicitation and general advertising in certain securities offerings was raised.
The proposal stems from the Jumpstart Our Business Startups Act (‘JOBS Act’), the aim of which is to increase the ability of small businesses and startups to raise capital.
The statement explains that the JOBS Act directs the SEC to lift certain prohibitions. As such, the Commission is seeking public comment on the proposed rules for 30 days, after which time the Commission will consider whether to adopt the proposed rules. However it shouldn’t result in a free for all as it will be a requirement for an issuer to take ‘reasonable steps’ to verify that the purchasers of the securities are accredited investors (Rule 506 refers) or qualified institutional buyers (Rule 144A refers).
The SEC has produced a fact sheet which can be accessed via the link provided.
