An Essay on Rule 506 of Regulation D: Its Questionable Origins, Regulatory Oblivion and Judicial Revitalization

摘要

In this essay, I have addressed several issues that critically relate to Rule 506's regulatory failures. As a substantive exemption from registration, it stands in stark contrast with the consistently affirmed scope of its statutory source, failing to protect the very offerees the 1933 Act was enacted to protect. Its harnessing as a preemptive covered security under NSMIA has simply compounded the harm. Fortunately, the courts have overwhelmingly agreed that these promoters must bear the burden of compliance with the conditions of the exemption in order to trigger its preemptive effect.