Rule 506: A 'Poison Pill' In The Safe Harbor?

Law360, New York (September 24, 2012, 5:21 PM EDT) -- The U.S. Securities and Exchange Commission proposed a rule at the end of August that would permit companies to sell their securities privately while engaging in general solicitation and general advertising. Although the rule is mandated by the Jumpstart Our Business Startups Act enacted earlier this year, there are many critics of the proposal who believe that it will weaken investor protection.

The critics can relax. The SEC has planted a poison pill in the proposed rule that practically guarantees that most companies will not use...
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