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Beau Dietl & Associates on SEC “Bad Actor” Provision

Jumpstart Our Business Startups Act (JOBS Act)

The Jumpstart Our Business Startups Act (JOBS Act) is a legislation signed into law on April 5, 2012 that is intended to stimulate job growth for smaller companies in the United States. It loosens regulatory restrictions on private offerings, initial public offerings, and certain newly public companies.

Most private placements utilized the SEC’s Rule 506 to facilitate public offerings which permits sales of an unlimited dollar amount of securities to be made without Securities Act registration. Rule 506 also permits sales to an unlimited number of accredited investors as long as there is no general revenue solicitation.

Section 201 (a) of the JOBS Act eliminates the prohibition against general solicitation for Rule 506 as long as the purchasers are accredited investors.

Bad Actor Provisions of Rule 506

The “Bad Actor” provisions disqualify securities offerings from reliance on exemption if the issuer or other relevant persons have been convicted of securities fraud or other violations of specified laws that occurred on or after September 23, 2013.

Disqualifying Events

  • Certain criminal convictions
  • Court Injunctions and Restraining Orders
  • Final orders of certain state and federal regulators
  • Certain SEC disciplinary orders
  • Certain SEC cease-and-desist orders
  • SEC stop orders and orders suspending the Regulation-A exemption
  • Suspension or expulsion from membership in a self-regulatory organization (SRO) such as FINRA, or from association with an SRO member
  • U.S. Postal Service false representation orders

What Beau Dietl & Associates can do for you

  • BDA Actor Background Checks
  • SRO Status Verification
  • Professional Licenses Verification
  • Criminal Background Checks
  • Civil, State, and Federal Litigation Search
  • General Background Checks
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