Securities Issuers, Beware of "Bad Actors"

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April 14, 2014
Chicago Daily Law Bulletin

Under new Securities and Exchange Commission “bad actor” rules, companies raising capital from investors can’t rely on Rule 506 for their securities offerings if their “covered persons” have undergone “disqualifying events.” Associating with “bad actors” can disqualify companies of all sizes — from startups conducting seed-round offerings with friends-and-family or angel investors to public corporations doing private investment in public equity offerings — from relying on the Rule 506 safe harbors for the privateplacement exemption from securities registration requirements.

In their article for the Chicago Daily Law Bulletin, Eric Fogel and Vic Peterson elaborate on this issue.

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