10 Pa. Code § 606.031 - Advertising literature
(a)
Advertisements. Except as permitted by section 606(c) of the
act (70 P.S. §
1-606(c)), a person may not
publish an advertisement concerning a security in this Commonwealth unless all
of the following are met:
(1) The
advertisement is either of the following:
(i)
Permitted by this section and complies with any requirements imposed by this
section.
(ii) Specifically excluded
from application of this section by subsection (f).
(2) The character and composition of the
statements and graphics contained in the advertisement do not exaggerate the
investment opportunity, overemphasize any aspect of the offering, minimize the
risks of the enterprise or predict revenues, profits or payment of dividends,
including financial projections or forecasts.
(3) The advertisement does not contain any
statement that is false or misleading in any material respect or omits to make
any material statement necessary in order to make the statements made, in the
light of the circumstances under which they are made, not misleading.
(b)
Registered offerings:
permitted advertisements after filing but before effectiveness. The
following apply with respect to publication of advertisements in this
Commonwealth in connection with an offering of securities in this Commonwealth
for which a registration statement has been filed with the Department under
section 205 or 206 of the act (70 P.S. §§
1-205 and
1-206) that has not yet
become effective.
(1) In connection with a
registration statement filed with the Department under section 205 or 206 of
the act for the sale of securities in this Commonwealth which also are the
subject of a registration statement filed under section 5 of the Securities Act
of 1933 (15 U.S.C.A. §
77e), a person may publish any of the
following in this Commonwealth before effectiveness of the registration
statement under the act:
(i) Advertisements
which comply with section 2(a)(10)(b) of the Securities Act of 1933
(15 U.S.C.A. §
77b(a)(10)(b)).
(ii) Advertisements which comply with Rule
134 (17 CFR
230.134) (relating to communications not
deemed a prospectus) promulgated by the Securities and Exchange
Commission.
(iii) A preliminary
prospectus which is part of a registration statement that has been filed with
the Securities and Exchange Commission under section 5 of the Securities Act of
1933 and complies with Rule 430 (17 CFR 230.430) (relating to
prospectus for use prior to effective date) promulgated by the Securities and
Exchange Commission.
(iv) A summary
prospectus which is part of a registration statement that has been filed with
the Securities and Exchange Commission under section 5 of the Securities Act of
1933 and complies with Rule 431 (17 CFR 230.431) (relating to
summary prospectuses) promulgated by the Securities and Exchange
Commission.
(2) In
connection with an offering circular for the offer and sale of securities in
this Commonwealth filed with the Securities and Exchange Commission under
Regulation A (17 CFR
230.251-230.263) (relating to
conditional small issues exemption), promulgated under section 3(b) of the
Securities Act of 1933 (15
U.S.C.A. §
77c(b)) and
with the Department under section 205 or 206 of the act, a person may publish
an advertisement in this Commonwealth that complies with Rule 251(d)(1)(ii)(C)
(17 CFR
230.251(d)(1)(ii)(C))
(relating to scope of exemption) promulgated by the Securities and Exchange
Commission before effectiveness of the offering circular under the act if all
of the following conditions are met:
(i) The
advertisement is filed with the Department 10 days before publication in this
Commonwealth.
(ii) The Department
does not issue a letter disallowing its publication in this Commonwealth before
the expiration of the 10-day period.
(3) In connection with a registration
statement filed with the Department under section 206 of the act for the offer
and sale of securities in this Commonwealth for which no registration statement
has been filed with the Securities and Exchange Commission in reliance on
section 3(a)(4) or (11) of the Securities Act of 1933 and regulations
promulgated thereunder or Rule 504 (17 CFR 230.504) (relating to
exemption for limited offerings and sales of securities not exceeding
$5,000,000) promulgated by the Securities and Exchange Commission under section
3(b) of the Securities Act of 1933, a person may publish an advertisement in
this Commonwealth before effectiveness of the registration statement under the
act if all of the following are met:
(i) The
advertisement contains no more than the following:
(A) The name and address of the issuer of the
security.
(B) The title of the
security, the number of securities being offered, the total dollar amount of
securities being offered, yield and the per unit offering price to the
public.
(C) A brief, generic
description of the issuer's business.
(D) A statement, if applicable, that
completion of the offering is subject to receipt of subscriptions meeting a
stated minimum offering amount.
(E)
A statement providing the name and address of the underwriter or where a
prospectus may be obtained.
(F) A
statement in the following form: "A registration statement has been filed with
the Pennsylvania Department of Banking and Securities but has not yet become
effective. These securities may not be sold nor may offers to buy be accepted
before the time the registration statement becomes effective. This
advertisement does not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these securities in the
Commonwealth of Pennsylvania before registration of the securities under the
Pennsylvania Securities Act of 1972."
(ii) The advertisement is filed with the
Department 10 days before publication in this Commonwealth.
(iii) The Department does not issue a letter
disallowing its publication in this Commonwealth before the expiration of the
10-day period.
(c)
Registered offerings: permitted
advertisements after effectiveness. The following apply with respect
to publication of advertisements in this Commonwealth in connection with an
offering of securities in this Commonwealth for which a registration statement
has become effective under section 205 or 206 of the act.
(1) In connection with a registration
statement filed with the Department under section 205 or 206 of the act for the
offer and sale of securities in this Commonwealth which also are the subject of
a registration statement filed under section 5 of the Securities Act of 1933
which has become effective, a person may publish an advertisement in this
Commonwealth if it is preceded or accompanied by a copy of the final
prospectus.
(2) In connection with
an offering circular for the offer and sale of securities in this Commonwealth
that has been filed with the Securities and Exchange Commission under
Regulation A (17 CFR
230.251-230.263) promulgated
under section 3(b) of the Securities Act of 1933 and with the Department under
section 205 or 206 of the act and has been qualified by the Securities and
Exchange Commission under Regulation A and has become effective under section
205 or 206 of the act, a person may publish an advertisement in this
Commonwealth if the advertisement is accompanied or preceded by a copy of the
final offering circular.
(3) In
connection with a registration statement filed with the Department under
section 206 of the act for the offer and sale of securities in this
Commonwealth for which no registration statement has been filed with the
Securities and Exchange Commission in reliance on section 3(a)(4) or (11) of
the Securities Act of 1933 and regulations promulgated thereunder or Rule 504
(17 CFR
230.504) promulgated by the Securities and
Exchange Commission under section 3(b) of the Securities Act of 1933 that has
become effective under the act, a person may publish in this Commonwealth an
advertisement if all of the following are met:
(i) The advertisement contains no more than
the following:
(A) The name and address of the
issuer of the security.
(B) The
title of the security, the number of securities being offered, the total dollar
amount of securities being offered, yield and the per unit offering price to
the public.
(C) A brief, generic
description of the issuer's business.
(D) A statement, if applicable, that
completion of the offering is subject to receipt of subscriptions meeting a
stated minimum offering amount.
(E)
A statement, if applicable, that funds accompanying the subscription agreement
are subject to escrow and the terms of the escrow.
(F) The name and address where the final
prospectus may be obtained if delivery of the final prospectus does not precede
or accompany the advertisement.
(G)
A statement in the following form: "This advertisement does not constitute an
offer to sell nor a solicitation of an offer to buy any of the securities. The
offering is made only by the prospectus."
(ii) The advertisement is filed with the
Department 5 days before publication in this Commonwealth.
(iii) The Department does not issue a letter
disallowing publication in this Commonwealth before the expiration of the 5-day
period.
(4) A person may
not publish an advertisement in this Commonwealth in connection with the offer
and sale of any security registered under section 205 or 206 of the act at any
time after the expiration of the effective period of the registration statement
relating to that security as determined by section 207 of the act
(70 P.S. §
1-207).
(d)
Exempt securities. The
following apply:
(1)
Exempt
securities other than sections 202(a) and (i) of the act. Except as
provided in paragraphs (2) and (3), a person may publish an advertisement in
this Commonwealth in connection with the offer or sale of a security in this
Commonwealth which is exempt under section 202 of the act (70 P.S. §
1-202).
(2)
Section 202(a) of the
act. In connection with the offer or sale of any security in this
Commonwealth made in reliance on section 202(a) of the act which is issued by
the Commonwealth, any political subdivision, or any agency or corporate or
instrumentality of the Commonwealth and which security represents less than a
general obligation of the issuer, a legend adequately describing the limited
nature of the obligation must appear prominently in bold face type of at least
12 points in size on the face page of any preliminary offering statement,
official offering statement or advertisement published in this
Commonwealth.
(3)
Section
202(i) of the act. A person may publish an advertisement in this
Commonwealth in connection with the offer or sale of a security in this
Commonwealth which is exempt under section 202(i) of the act except if the
Department, by rule or order, has prohibited use of advertisements as a
condition of the availability of the exemption.
(e)
Exempt transactions. All
of the following apply:
(1)
Advertisements permitted. Except as provided in paragraph (2),
a person may publish any advertisement in this Commonwealth in connection with
a securities transaction in this Commonwealth which is exempt from registration
under section 203 of the act (70 P.S. §
1-203).
(2)
Advertisements
prohibited. A person may not publish any advertisement in this
Commonwealth in connection with the following securities transactions which are
effected in this Commonwealth:
(i) A sale of a
security made in reliance on section 203(d) of the act.
(ii) An offer of a security made in reliance
on section 203(e) of the act which results in a sale under section 203(d) of
the act.
(iii) An offer or sale of
a security made in reliance on section 203(j) of the act.
(iv) An offer or sale of a security made in
reliance on section 203(s) of the act.
(v) An offer or sale of a security made in
reliance on §
203.187 (relating to small issuer
exemption).
(vi) An offer or sale
of a security made in reliance on §
203.189 (relating to isolated
transaction exemption).
(vii) An
offer or sale of a security which is exempt under section 203(r) of the act
when the Department, by rule or order, has prohibited use of advertisements as
a condition of the availability of the exemption.
(f)
Excluded advertisements
. All of the following apply:
(1) This section
does not apply to advertisements described in paragraph (2) if all of the
following are met:
(i) The character and
composition of the statements and graphics contained in the advertisement do
not exaggerate the investment opportunity, overemphasize any aspect of the
offering, minimize the risks of the enterprise or predict revenues, profits or
payment of dividends, including financial projections or forecasts.
(ii) The advertisement does not contain any
statement that is false or misleading in any material respect or omits to make
any material statement necessary to make the statements made, in the light of
the circumstances under which they are made, not misleading.
(2) The following advertisements
are excluded from the provisions of this section if the requirements of
paragraph (1) have been met:
(i) General
solicitation in connection with the offer or sale of a security in reliance on
section 203(t) of the act.
(ii)
Advertisements which comply with Rule 135 promulgated by the Securities and
Exchange Commission (17 CFR
230.135) (relating to notice of proposed
registered offerings).
(iii)
Advertisements which comply with Rule 135c promulgated by the Securities and
Exchange Commission (17 CFR
230.135c) (relating to notice of certain
proposed unregistered offerings).
(iv) Advertisements in connection with an
offer of a security in reliance on §
203.190 (relating to certain
Internet offers exempt) which comply with the legend requirement of §
203.190(a)(1).
(v) Advertisements
in connection with the offer or sale of Federally covered securities under
section 18(b)(4)(C) and (E) of the Securities Act of 1933 (15 U.S.C.A. §
77r(b)(4)(C) and (E)) when
the issuer relies upon and is in compliance with Rule 506(c) of Regulation D
(17 CFR
230.506) (relating to exemption for limited
offers and sales without regard to dollar amount of offering) or regulation
crowdfunding.
(g)
Securities and Exchange
Commission interpretive advice on use of electronic media . A person
who uses electronic media to publish an advertisement in this Commonwealth in
connection with a security which is the subject of a registration statement
filed with the Department under section 205 or 206 of the act and with the
Securities and Exchange Commission under section 5 of the Securities Act of
1933 may rely on the interpretive advice of the Securities and Exchange
Commission in Release No. 33-7856 (April 28, 2000) and subsequent advice given
under that release. To the extent that the interpretive advice contradicts any
requirement in subsection (a)(1) or (b)(1), the Department will not take any
enforcement action if the person complies with the interpretive
advice.
Notes
The provisions of this § 606.031 amended under sections 606(d) and 609(a) of the Pennsylvania Securities Act of 1972 (70 P.S. §§ 1-606(d) and 1-609(a)); section 202.C of the Department of Banking and Securities Code (71 P.S. § 733-202.C); and section 9(b) of the Takeover Disclosure Law (70 P.S. § 79(b)).
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