SEC Lifts Ban on General Solicitation and Advertising: What OTCQX, OTCQB and OTC Pink Companies Should Know

On September 23, the JOBS Act-mandated SEC rule permitting general solicitation and advertising of private offerings conducted under SEC Rules 506(c) and Rule 144A went into effect, opening a key door to capital for U.S. and global companies. We explain what the new rule means for OTCQX, OTCQB and OTC Pink companies, some issues companies consider before engaging in general solicitation of a Rule 506(c) or Rule 144A offering, and what rules have still to be approved.

What do the new rules mean for OTCQX, OTCQB and OTC Pink companies?

Companies that are raising money in offerings under Rule 506(c) of Regulation D or Rule 144A of the Securities Act will now be able to share information publicly, including offering documents. This is a great step forward for improving access to capital and making secondary markets more efficient.

Previously, companies were banned from publicly disclosing information relating to securities offerings unless the offerings were registered with the SEC. Lifting the ban lifts the veil of secrecy that has existed in private offerings, allowing companies to be transparent about the money they are looking to raise in private offerings.  In short, an S-1 registration statement is no longer the only means by which a company can raise money transparently.

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Monthly Trade Summary — September 2013