SEC Delays JOBS Act Implementation
According to several news sources, the SEC will delay implementing rules to allow general solicitations for private placements as required by the JOBS Act. Pursuant to the Act, the SEC must adopt rules to ensure that issuers take “reasonable steps” to ensure that potential investors qualify as accredited investors. Consequently, it is delaying the changes to Rule 506 of Regulation D until it proposes rule changes and hears comments.
OUR TAKE: We will not debate the wisdom of the JOBS Act and whether it will really help capital formation or harm the public (see linked NY Times editorial). However, the SEC risks more criticism if it doesn’t move quickly to enact a federal law supported by both parties and signed by the President. For the time being, private fund sponsors must still avoid general solicitation.
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