‘Reg D’ rules set for August review

The US Securities and Exchange Commission will meet 22 August to discuss rules rescinding the long-held ban on private equity managers marketing their funds publicly.

The SEC said late last month it would miss the deadline for implementation of the rules around general solicitation of private equity funds, which are included in the Jumpstart Our Business Startups Act. The JOBS Act was signed into law by President Barack Obama in April.

The SEC issued a notice earlier this month saying it would “consider rules” to eliminate the prohibition against general solicitation in securities offerings – known as Regulation D. The language the SEC used — “consider rules” — was “ambiguous”, according to John Sabl, a partner in the corporate and securities practice group at law firm Sidley Austin.

“Their other language on the other matters (for 22 August) refers to the consideration of 'adopting rules,'” Sabl said. “”They could be just issuing proposed rules then or adopting final rules or interim final rules. It also is possible that they may be proposing rules before that time.”

The SEC declined to comment.

For now, GPs should keep in mind that the rules have not been finalised and the ban on general solicitation remains in full force, said Sabl in a prior interview.

The SEC has been working on crafting a definition of “accredited investors”, according to testimony from Mary Schapiro, the commission’s chairwoman, said during testimony in late June. In the past, accredited investors earned that designation by meeting a few key characteristics, like net worth and income. The SEC has been working to determine if that is enough to be “accredited”.