On April 5, 2012, the Jumpstart Our Business Startups Act (the "JOBS Act") was enacted. The stated objective for the JOBS Act is to improve access to the public capital markets for startup and emerging companies and thus increase job creation and economic growth in the United States.
Title II of the JOBS Act ("Title II") mandated the Securities and Exchange Commission (the "Commission") to amend applicable rules within 90 days of its enactment (i.e., July 5, 2012) in order to eliminate the prohibitions against general solicitation or general advertising (collectively, "General Solicitation") in Rule 506 of Regulation D ("Rule 506") under the Securities Act of 1933, as amended (the "Securities Act"), and under Rule 144A under the Securities Act ("Rule 144A"). These changes are intended to allow issuers to advertise broadly when conducting private placements and thus enable them directly to reach a greater number of potential investors at lower costs without an intermediary, subject to certain requirements.
In August 2012, the Commission proposed a new Rule 506(c) and an amendment to Rule 144A to implement Title II. During an open meeting on July 10, 2013, the Commission issued two releases (33-9414 (bad actor) and 33-9415 (Rule 506, Rule 144A and Form D)) which adopted new rules (collectively, the "Adopted Rules") that: