In Rule 144A offerings in which the securities were initially sold to financial intermediaries in transactions exempt under Section 4(a)(2) or Regulation S of the Securities Act, general solicitation may be conducted by the issuer as well as initial purchasers involved in the Section 4(a)(2) or Regulation S transaction and other distribution participants. (Question 138.03.)

The recent amendments to Rule 144A permitting the use of general solicitation do not change how directed selling efforts under Regulation S are analyzed in concurrent Rule 144A and Regulation S offerings. (Question 138.04.)

If an issuer commenced an offering in reliance on Rule 506 before September 23, 2013 and filed a Form D notice for the offering but now decides to continue that offering in reliance on Rule 506(c), the issuer must file an amendment to the Form D if there is a change in the information provided in the previously filed Form D. If the issuer decides to continue the offering in reliance on Rule 506(b), no amendment to the previously filed Form D is required solely to reflect this decision. (Question 260.05.)

An issuer does not lose the ability to rely on Rule 506(c) for an offering if a person who does not meet the criteria for any category of accredited investor purchases securities in the offering, so long as the issuer took reasonable steps to verify that the purchaser was an accredited investor and had a reasonable belief that the purchaser was an accredited investor at the time of the sale of securities. (Question 260.06.)

The verification requirement in Rule 506(c) is separate from and independent of the requirement that sales be limited to accredited investors. The verification requirement must be satisfied even if all purchasers are accredited investors. An issuer may satisfy the verification requirement of Rule 506(c) by either using the principles-based method of verification or relying on one of the specific, non-exclusive verification methods listed in the rule. Although use of the non-exclusive verification methods are not required, an issuer that chooses to use one of the methods must satisfy the specific requirements of that method. (Questions 260.07, 260.08, 260.09 and 260.10.)

If an issuer commenced an offering intending to rely on Rule 506(c) but did not engage in any form of general solicitation in connection with the offering, the issuer is permitted to subsequently determine to rely on Rule 506(b) for the offering if the conditions of Rule 506(b) have been satisfied with respect to all sales of securities that have occurred in the offering. If the issuer already filed a Form D indicating its reliance on Rule 506(c), it must amend the Form D to indicate its reliance on Rule 506(b) instead, as that decision represents a change in the information provided in the previously filed Form D. These principles also apply if an issuer changes a Rule 506(b) offering to a Rule 506(c) offering. (Questions 260.11 and 260.12.)

If the conditions of Rule 506(c) are not met in a purported Rule 506(c) offering, the Section 4(a)(2) private offering exemption is not available to the issuer if the issuer has engaged in general solicitation. The use of general solicitation continues to be incompatible with a claim of exemption under Section 4(a)(2). (Question 260.13.)