Bailey McCann, Opalesque New York: Both houses of Congress have passed the Jumpstart Our Business Startups Act (JOBS Act), a new piece of legislation which will eliminate the prohibition of general solicitation by private funds. The bill, HR 3606, is expected to be signed into law by President Obama as early as this week.
"Private funds," is an umbrella term used to describe a variety of investment vehicles including hedge funds, private equity funds and fund of funds. All of these vehicles have been prohibited from most advertising and solicitation activities under Rule 506 of the Securities Act of 1933. Under the provisions of the JOBS Act, the Securities and Exchange Commission (SEC) would be required to amend these rules to reflect new allowances created through the JOBS Act.
Before the JOBS Act, private funds refrained from general advertising and solicitation or else they would have to register with the SEC or meet an exemption. Through the new rules, private funds will now be able to engage in advertising. According to a client alert from US-based law firm Sadis & Goldberg, obtained by Opalesque, "the JOBS Act provides that transactions conducted pursuant to Rule 506, 'shall not be deemed public offerings under the Federal securities laws as a result of general advertising or general solicitation.’"
Further, the JOBS Act requires that the SEC no later tha......................
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