General Solicitation and Bad Actors: Assessing the Impact of the JOBS Act Rules and Related Changes to Regulation D

The SEC recently adopted amendments to Regulation D, to become effective September 23, that will permit private fund sponsors to engage in general advertising and general solicitation in connection with certain private fund offerings, and will disqualify private funds from relying on Regulation D if a “bad actor” is participating in a fund offering. The SEC also proposed rules that would give the SEC staff greater ability to monitor Regulation D offerings, including general solicitation offerings. These amendments and proposed rules may result in significant changes to offering practices of hedge funds, private equity funds and other private funds in the United States. They also raise important questions, including what constitutes “reasonable steps to verify” accredited investor status, how these rules intersect with other rules applicable to private fund offerings, and what steps funds should take now to ensure compliance with the “bad actor” amendment.  On August 8 we discussed these changes to Regulation D and the opportunities and challenges they presented for private fund sponsors.

Speakers included Jason E. Brown, Deborah A. Monson and Joel A. Wattenbarger of Ropes & Gray.

Contact Info RGevents@ropesgray.com