The Regulatory Vortex for Private Placements
45 Securities Regulation Law Journal 9 (2017)
16 Pages Posted: 19 Sep 2017 Last revised: 19 Oct 2017
Date Written: July 1, 2017
This article addresses the array of regulatory exemptions from federal registration requirements under the Securities Act of 1933. The author briefly describes those exemptions and then discusses what he has identified as the regulatory vortex that drives the overwhelming majority of private placement issuers to utilize the Rule 506(b) exemption. Based on extensive survey data, the author examines the primary factors that leave issuers and their attorneys reluctant to employ the newly created Rule 506(c) exemption. The article concludes that a combination of these reluctance factors dissuade users from relying on Rule 506(c) and instead strengthen the preference for the 506(b) exemption, despite the fanfare with which Congress recently passed the new rule.
Keywords: Private Placements, Securities Registration, Regulatory Exemptions, Covered Securities, Vortex
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