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Securities law

University of Georgia School of Law

Finance and Financial Management

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In Search Of Safe Harbor: Suggestions For The New Rule 506(C), Usha Rodrigues May 2013

In Search Of Safe Harbor: Suggestions For The New Rule 506(C), Usha Rodrigues

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I devote most of this essay to exploring how, exactly, the Securities and Exchange Commission (“SEC”) should go about providing guidelines to implement the statutory requirement that issuers have a reasonable belief that a purchaser is accredited. The SEC has proposed rules, but these rules merely restate what Congress has already required, thus sidestepping Congress’s direction that the agency itself articulate some verification methods. Taking the SEC’s decidedly amorphous proposal to task, I recommend that the SEC offer two nonexclusive safe harbors for issuers to guide them in determining whether a natural person is an accredited investor. The ...