SEC backtracks on private-placement rule change

Via InvestmentNews:

The Securities and Exchange Commission will not be passing an interim rule next week that would have let issuers of private securities, like hedge funds, immediately begin to make solicitations to the public.

Instead, the commission will issue a proposed rule with a public comment period, according to SEC spokesman John Nester.

SEC chairman Mary Schapiro “believes it is important for the general solicitation rule to be proposed for public comment, as is our typical practice in rulemaking,” Mr. Nester said in a statement.

“This transparent process will provide the opportunity for feedback from companies, investors and market participants who may be impacted by the final rule,” he wrote.

The SEC is meeting Aug. 22 to consider the rule, which once passed, will open the door to general solicitation for private securities issued under SEC Rule 506 of Regulation D.

The rule change is mandated under the Jumpstart Our Business Startups Act.

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