Despite some strenuous objections, the SEC agreed to propose a rule to lift the ban on general solicitation and advertising for certain private offerings as required by the JOBS Act.
The JOBS Act required to the SEC to allow Securities Act of 1933 Rule 506 issuers to broadly market their securities so long as the securities were purchased only by accredited investors, and to eliminate the advertising prohibition under Securities Act Rule 144A. One issue left open by this rule proposal is that there is no specific verification method to determine accredited investor status. The SEC believes such an approach would not be worthwhile since there are many ways to do so. Issuers must instead take “reasonable steps” to determine such a status under the proposal.
Although the SEC proposed this rule sometime ago, no action has been taken.