New SEC Rules Permit All Issuers to "Test the Waters"

By Steve Quinlivan, Bryan Pitko and Jaclyn Schroeder

Stinson LLP has prepared an analysis of new SEC rules in a release captioned "Solicitations of Interest Prior to a Registered Public Offering." New Rule 163B enables all issuers to engage in test-the-waters communications with qualified institutional buyers and institutional accredited investors regarding a contemplated registered securities offering.

The communications permitted by the new rules will be exempt from restrictions imposed by Section 5 of the Securities Act on written and oral offers prior to or after filing a registration statement. The expanded test-the-waters provision will also provide all issuers with flexibility in determining whether to proceed with a registered public offering while maintaining appropriate investor protections.

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