Rule 502(c) of the Securities Act of 1933, as amended (the "Securities Act"), prohibits an issuer from offering or selling securities by any form of general solicitation or general advertising when conducting certain offerings exempt from registration under the safe harbors provided under Regulation D of the Securities Act. Many have felt that, over the years, this prohibition has impaired capital formation and that it would be more appropriate to regulate actual sales rather than offers. In order to address this, Congress passed the JOBS Act directing the SEC to relax the prohibition against general solicitation and general advertising for certain offerings made in reliance on Rule 506 of the Securities Act. The amendments to Rule 506 adopted by the SEC became effective in July 2013. The amendments implemented a bifurcated approach, allowing for private placements to be conducted in reliance on Rule 506(b) without general solicitation and general advertising and for certain exempt offerings to be conducted using general solicitation or general advertising in reliance on Rule 506(c).

Read more about general solicitation and general advertising in our latest On Point.

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