New SEC Staff Guidance on General Solicitation

September 2, 2015

On August 6, 2015, the SEC staff issued new guidance on what constitutes “general solicitation and general advertising.” “General solicitation” and “general advertising” are not new concepts—an issuer and its intermediaries have long had to determine that they did not engage in publicity to rely on the private placement exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), for “transactions by an issuer not involving any public offering.” The August guidance for the most part is not new, but it confirms existing pronouncements in some respects and expands them in others, with one exception. We believe it should give greater comfort to issuers that certain types of offering-related communications will not preclude them from relying on Section 4(a)(2) or Rule 506(b) under Regulation D.