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Buy for $6.95
The new Rule 506 changes everything.
The SEC has lifted an 80-year ban on general solicitation. Start-ups for the first time can use public advertising to sell private offerings. The new Rule 506 may prove to be the answer to the prayers of star-ups frustrated with existing fund sourcing platforms. But it also has hidden dangers that will cause many issuers to continue to use the "old Rule 506" [506(b)].
Among the new Rule 506 strengths:
- The amount that can be raised is unlimited
- There is no requirement for review of the offering under any Blue Sky laws (state securities regulations)
- There is no review of the offering by the SEC
- Solicitations can be online or offline
- Solicitations can be made to anyone