Securities and Exchange Commission: Disqualification of Felons and Other "Bad Actors" From Rule 506 Offerings
GAO-13-817R: Aug 8, 2013
- Full Report:
GAO reviewed the Securities and Exchange Commission's (Commission) new rule on disqualification of felons and other "Bad Actors" from rule 506 offerings. GAO found that (1) the final rule adopts amendments to the Commission rules to implement Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). Section 926 requires the Commission to adopt rules that disqualify securities offerings involving certain "felons and other 'bad actors'" from reliance on Rule 506 of Regulation D. The rules must be "substantially similar" to Rule 262 under the Securities Act, which contains the disqualification provisions of Regulation A under the Securities Act, and must also cover matters enumerated in Section 926 of the Dodd-Frank Act (including certain state regulatory orders and bars); and (2) the Commission complied with applicable requirements in promulgating the rule.