The new Rule 506 changes everything.
The SEC has lifted an 80-year ban on general solicitation. Start-ups for the first time can use public advertising to sell private offerings. The new Rule 506 may prove to be the answer to the prayers of star-ups frustrated with existing fund sourcing platforms. But it also has hidden dangers that will cause many issuers to continue to use the "old Rule 506" [506(b)].
Among the new Rule 506 strengths:
The amount that can be raised is unlimited
There is no requirement for review of the offering under any Blue Sky laws (state securities regulations)
There is no review of the offering by the SEC
Solicitations can be online or offline
Solicitations can be made to anyone
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