The Jumpstart Our Business Startups (JOBS) Act, which became
law April 5, 2012, requires the Commission to engage in several rulemakings. In
the near term, the SEC must adopt rules to implement Title II within 90 days
after enactment. The Commission has not yet proposed any JOBS Act rules, but the
Title II rules are due on or about July 4, 2012.
In testimony on June 28, 2012 before the U.S. House
Subcommittee on TARP, Financial Services and Bailouts of Public and Private
Programs, SEC Chairman Mary L. Schapiro stated:
"The rulemakings to revise Rule 506
and Rule 144A are both required to be completed within 90 days of enactment of
the JOBS Act. As I stated to Congress prior to the passage of the Act, time
limits imposed by the JOBS Act are not achievable. Here, the 90 day deadline
does not provide a realistic timeframe for the drafting of the new rule, the
preparation of an accompanying economic analysis, the proper review by the
Commission, and an opportunity for public input. Although we will not meet this
deadline, the staff has made significant progress on a recommendation and
economic analysis, and it is my belief that the Commission will be in a
position to act on a staff proposal in the very near future."
Title II directs the Commission to remove the ban on general
solicitation or general advertising stated in Securities Act Rule 502(c) of
Regulation D for offers and sales of securities made under Rule 506 of Regulation
D. Amended Rule 506 must require all purchasers of these securities to be
accredited investors. The rules also must require an issuer to take reasonable
steps to verify the accredited investor status of any purchasers, using methods
to be determined by the Commission. Rule 506 must continue to be treated as
issued under Securities Act Section 4(2).
Title II also requires the Commission to amend Securities Act Rule 144A(d)(1) to provide that securities sold under the revised exemption may be offered (including by general solicitation or advertising) to persons who are not qualified institutional buyers (QIBs), but these securities may be sold only to persons the seller (or any person acting on the seller’s behalf) reasonably believes are QIBs.