On Dec. 4, 2013, the Division of Corporate Finance of the U.S. Securities and Exchange Commission supplemented its Compliance and Disclosure Interpretations (“C&DIs”)[1] to address some of the questions raised by private fund managers (and others) regarding the recently promulgated “bad actor” rules contained in new Rule 506(d).[2]

New Rule 506(d), which became effective on Sept. 23, 2013, disqualifies issuers that have committed or experienced (or who have a relationship with certain categories of persons who have committed or experienced) one or more of an enumerated list of bad acts and actions from relying on the exemption from registration under the Securities Act of 1933 provided by Regulation D. However, the final text of the rule raised a number of questions on how certain provisions of the bad actor rule would be interpreted in the context of private funds.

Click here to read more on the “bad actor” rules contained in Rule 506(d).