Background

The Commission considered a proposed rule mandated by the JOBS Act to eliminate the current prohibition against general solicitation and general advertising in certain securities offerings — particularly offerings conducted under Rule 506 of Regulation D.

Rule 506 is one of the exemptions that has been widely used by U.S. and foreign issuers to raise capital without registering their securities offerings.

In 2011, the estimated amount of capital raised in these types of exempt offerings was just over $1 trillion, which is comparable to the amount of capital raised in registered offerings during this same period.

These figures underscore the importance of these exemptions for companies seeking capital in the United States.

When the Commission adopted Rule 506 more than three decades ago, it said the issuer, or any person acting on its behalf, could use the exemption only if they were not offering or selling securities through general solicitation or general advertising.

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