Key takeaways:

• The SEC has adopted amendments to Rule 506 of Regulation D and to Rule 144A under the Securities Act that eliminate the ban on “general solicitation” and “general advertising” of securities offerings conducted under those rules and will permit issuers – including operating companies and private equity and hedge funds – to more broadly solicit investors and publicize their offerings.
• Under amended Rule 506(c) securities may be sold only to purchasers reasonably believed to be accredited investors. The amended rule includes four specific non-exclusive methods of verifying accredited investor status for natural persons.
• In addition, the SEC (i) adopted rules mandated under Dodd-Frank prohibiting certain felons and other bad actors from utilizing Rule 506, and (ii) proposed new amendments to Regulation D, Form D and Rule 156 intended to enable the SEC to evaluate the development of market practices in Rule 506 offerings and help address concerns of an increase in fraudulent market activity. The proposed amendments to Rule 156 reflect an increased SEC focus on private fund marketing.