Disqualification of Felons and Other "Bad Actors" From Rule 506 Offerings

We are proposing amendments to our rules to implement Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 926 requires us to adopt rules that disqualify securities offerings involving certain "felons and other `bad actors'' from reliance on the safe harbor from Securities Act registration provided by Rule 506 of Regulation D. The rules must be "substantially similar' to Rule 262, the disqualification provisions of Regulation A under the Securities Act, and must also cover matters enumerated in Section 926 (including certain state regulatory orders and bars).