NASAA President Calls on SEC to Withdraw Proposed Rule Lifting Ban on General Solicitation

In a news conference this week, North American Securities Administrators Association (“NASAA”) President and Arkansas Securities Commissioner Heath Abshure sharply criticized the SEC’s proposed rule allowing marketing of private offerings. Mr. Absure, who was joined in the conference by Cristina Martin Firvida of AARP, Heather Slavkin Corzo, AFL-CIO, and Barbara Roper of the Consumer Federation of America, called on the SEC to withdraw the proposal and craft new rules that promote capital formation but do not sacrifice investor protection. As Abshure stated: “Rule 506 offerings already are the most frequent financial product at the heart of state enforcement investigations and actions. Lifting the advertising ban on these highly risky, illiquid offerings, without requiring appropriate safeguards, will create chaos in the market and expose investors to an even greater risk of fraud and abuse. Without adequate investor protections to safeguard the integrity of the private placement marketplace, investors should and will flee from the market, leaving small businesses without an important source of capital.”

These statements follow NASAA’s highly critical October 3, 2012 comment letter to the SEC calling on the agency to abandon the proposed rule, which it stated “does nothing more than repeat what is already in the statute.”

The comment period for the proposed amendment to Rule 506 closed on October 5, 2012, though comments are still being accepted on the SEC’s website. For further information about SEC’s proposal or any other securities related concern, please contact the author at sarah.weber@jackolg.com or (619)298-2880.

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