A VC in Vacationland

Recently the SEC
published proposed Rule 506(c), which for the first time will allow companies
to advertise offerings of securities without filing a registration statement.
The key limiting factor is that sales under the amended Rule may be made only
to institutions and individuals who meet the accredited investor definition.

For many years the
“accredited-only” offering under Rule 506 has been a useful pathway for raising
capital, but advertising and general solicitation were strictly prohibited. An
amendment permitting advance publicity for these transactions is a very
significant development.

The proposed Rule is
in the “comment” stage until October 5. A final Rule along these lines could be
in effect soon thereafter.

Verril Dana has written a useful article
discussing some interesting implications of Rule 506(c). Check it out and see if you want to comment on the upcoming changes.