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Proposed rules just that, proposed
1. Proposed Rules Just That, Proposed
by Joe Wallin
September 9, 2013
Joe Wallin
Davis Wright Tremaine LLP
joewallin@dwt.com
@joewallin
(206) 757-8184
2. Proposed Rules Just That,
Proposed
A fundamental question that has been lingering for some
time was answered recently by the Chair of the SEC, Mary
Jo White. The question was, can a company start generally
soliciting on September 23, 2013, and only comply with
the final rules that go effective on that day, or do
companies that generally solicit also have to comply with
the proposed rules that were introduced on the same day?
3. Proposed Rules Just That,
Proposed
If you are not aware, the final rules contain three requirements if you
generally solicit:
1. That you only take money from accredited investors. An “accredited investor”
is generally an investor that either (i) made more than $200,000 a year for the
last two years, with the expectation of the same in the current year, or
$300,000 with spouse; or (ii) has a net worth in excess of $1,000,000
excluding primary residence.
2. That you take reasonable steps to verify the accredited investor status of your
investors and keep records you did so. This means reviewing Forms W-2 and
financial statements, etc.
3. That you check a box on your Form D that you generally solicited.
4. The proposed rules require much, much more.
1. That you file an Advance Form D 15 days before generally
soliciting;
2. That you submit your written offerings materials to the SEC;
3. That you include legends on all of your written general
solicitation materials;
4. That you file a closing amendment to your Form D after the
termination of your offering; and
5. That your Form D include a lot more information.
Proposed Rules Just That,
Proposed
5. In her letter to Congressman McHenry, Chair
White confirmed that issuers will not have to
comply with the proposed rules on September 23,
2013.
“Issuers are not required to comply with any aspect
of the Commissioner’s July 10th rule proposal until
such time as the Commissioner may approve a final
rule and such rule becomes effective.”
Proposed Rules Just That,
Proposed
6. • This is obviously good news.
• You can find a link to the letter here:
http://www.scribd.com/doc/160734110/2013-08-
08-Letter-From-SEC-Chair-to-McHenry
Proposed Rules Just That,
Proposed
