The Securities and Exchange Commission has released 14 new Compliance and Disclosure Interpretations to clarify rules pertaining to “bad actor” disqualifications from using the registration exemptions provided for Rule 506 offerings.
Issuers can be disqualified from relying on Rule 506 exemptions in a private offering if a covered person is guilty of proscribed actions. Among those covered are: issuer, including predecessors and affiliated issuers; directors, general partners, managing members, executive officers of the issuer, and other officers of the issuers that participate in the offering; 20 percent beneficial owners of the issuer; promoters connected to the issuer for pooled investment fund issuers, the fund’s investment manager and its principal; and those compensated for soliciting investors, including directors, general partners and managing members.
