{"id":5368,"date":"2012-10-27T00:00:00","date_gmt":"2012-10-27T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2012\/10\/if_sec_jobs_act_rule_506_propo"},"modified":"2022-03-09T16:20:30","modified_gmt":"2022-03-09T22:20:30","slug":"if-sec-jobs-act-rule-506-propo","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/if-sec-jobs-act-rule-506-propo\/","title":{"rendered":"If SEC JOBS Act Rule 506 Proposal is Made Final, Legal Challenges Are Likely"},"content":{"rendered":"\n<p>Officials representing consumers, union, and state groups are threatening legal proceedings should the Securities and Exchange Commission\u2019s proposed Rule 506 of the Jumpstart Our Business Startups Act becomes final. They strongly opposed the proposed rule, which is supposed to implement the JOBS Act\u2019s Section 201, which takes away the bars on general solicitations and general advertising for securities offerings that are exempt from registration, per Regulation D\u2019s Rule 506, as long as certain provisions are satisfied. The group officials say that they considered the proposal so flawed that they want the SEC to withdraw the rule, amend it, and propose it again.<\/p>\n<p>Proposed rule 506 gives a safe harbor for Section 4(2) of the Securities Act of 1933\u2019s private offering exemption. Companies that avail of the exemption can raise an unlimited sum of investor funds as long as they are in compliance with certain provisions. However, the groups\u2019 officials don\u2019t believe that the proposed rule gets specific enough about the reasonable steps that issuers must execute to make sure that only accredited investors are the ones that buy the issued securities. They also don\u2019t think that it protect investors enough from the greater <a href=\"https:\/\/www.securities-fraud-attorneys.com\/\">fraud risk <\/a>related to the implementation of the law. (For example, they want private funds to be subject to more restrictions when it comes to seeking capital and advertising to the public.) The group leaders also said that the term \u201caccredited investors\u201d is not defined in a manner that protects the investing public. <\/p>\n<p>Recently, both the SEC and the Commodity Futures Trading Commission had the experience of having the rulemakings they implemented, per the Dodd-Frank Wall Street Reform and Consumer Protection Act, vacated by federal court judges. Questions that were raised included those involving the thoroughness of one rule\u2019s cost benefit analysis and whether an appropriate enough job of comprehending Congressional intent was done when developing regulation. Even the North American Securities Administrators, which considers the SEC to be its partner, would consider a lawsuit against the Commission if proposed Rule 506 were to go through.<\/p>\n<div class=\"read_more_link\"><a href=\"https:\/\/www.investorlawyers.com\/blog\/if-sec-jobs-act-rule-506-propo\/\"  title=\"Continue Reading If SEC JOBS Act Rule 506 Proposal is Made Final, Legal Challenges Are Likely\" class=\"more-link\">Continue Reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Officials representing consumers, union, and state groups are threatening legal proceedings should the Securities and Exchange Commission\u2019s proposed Rule 506 of the Jumpstart Our Business Startups Act becomes final. They strongly opposed the proposed rule, which is supposed to implement the JOBS Act\u2019s Section 201, which takes away the bars on general solicitations and general [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[4026],"tags":[],"class_list":["post-5368","post","type-post","status-publish","format-standard","hentry","category-jobs-act"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>If SEC JOBS Act Rule 506 Proposal is Made Final, Legal Challenges Are Likely &#8212; Investor Lawyers Blog &#8212; October 27, 2012<\/title>\n<meta name=\"description\" content=\"Officials representing consumers, union, and state groups are threatening legal proceedings should the Securities and Exchange Commission\u2019s proposed Rule &#8212; October 27, 2012\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.investorlawyers.com\/blog\/if-sec-jobs-act-rule-506-propo\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"If SEC JOBS Act Rule 506 Proposal is Made Final, Legal Challenges Are Likely &#8212; Investor Lawyers Blog &#8212; October 27, 2012\" \/>\n<meta name=\"twitter:description\" content=\"Officials representing consumers, union, and state groups are threatening legal proceedings should the Securities and Exchange Commission\u2019s proposed Rule &#8212; October 27, 2012\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Shepherd Smith Edwards &amp; Kantas, LLP\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"If SEC JOBS Act Rule 506 Proposal is Made Final, Legal Challenges Are Likely &#8212; 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