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Corporate Advisory: Bad Actor Disqualification from 506 Offerings

The SEC has adopted rules that disqualify felons and other bad actors from participating in securities offerings under the safe-harbor exemption provided by Rule 506 of Regulation D promulgated under the Securities Act of 1933, as amended. As most private placements are done in reliance on Rule 506, issuers must exercise reasonable care in confirming they are satisfying their obligations under these new rules.