Can I Talk To the Press?

Can I Talk To the PressQ: My company is conducting a non-generally solicited offering under Rule 506(b). We have held our first closing and filed our Forms D with the SEC and various state securities departments. Now the press has picked up the Form D filing and reported about it in the paper. We didn’t talk to the newspaper that reported on it, but it they reported it anyway.

Now that the news is out, can I talk to the press about the offering, or will that blow my Rule 506(b) non-generally solicited offering status, and throw me into Rule 506(c)?

A: No, you can’t talk to the press about your non-generally solicited offering under Rule 506(b) as long as the offering is ongoing. And even after the offering is completed, you will want to exercise a lot of care in talking to the press, if, for example, you plan to conduct another offering in the near future under Rule 506(b).

It doesn’t matter that the press reported on it, based on the a Form D that you were required to file with the SEC within 15 days of the first sale.

To conduct your offering in accordance with Rule 506(b), you can’t “generally solicit” or “generally advertise” your offering.  Talking to the press about your offering would constitute “general solicitation” or “general advertising.”

If you did talk to the press about your offering while it was ongoing, that would put you in Rule 506(c), and then you would have to comply with the various obligations associated with Rule 506(c) offerings–namely:

1) Taking reasonable steps to confirm the accredited investor status of your investors, meaning reviewing Forms W-2 or similar financial statements of your investors and keeping records that you did so;

2) Checking the box that you relied on Rule 506(c) in your offering; and

3) Not taking any money from non-accredited investors.

Read my blog post The Pros and Cons of General Solicitation.

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About Joe Wallin

Joe Wallin focuses on emerging, high growth, and startup companies. Joe frequently represents companies in angel and venture financings, mergers and acquisitions, and other significant business transactions. Joe also represents investors in U.S. businesses, and provides general counsel services for companies from startup to post-public.
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  • Gary Jay Brooks

    Thanks for offering us case examples. Nice post.

    • http://startuplawblog.com/joewallin Joe Wallin

      Thanks Gary. Yeah, the old 506(b) offering is still hampered by these rules. The JOBS Act didn’t quite turn out as planned, at least so far. We need a JOBS Act II.