S.D. Admin. R. 20:08:07:24

Current through Register Vol. 51, page 67, December 16, 2024

Section 20:08:07:24 - Limited offerings general rules

(1) Limited offerings issued pursuant to an exemption from registration under SDCL 47-31B-203 will be reviewed on the basis of "full disclosure" rather than "merit" review.

(2) Any disclosure document used, shall contain full disclosure of all material facts relating to the issuer and the offer and sale of the securities. The North American Securities Administrators Association (NASAA) guidelines or statements of policy, may be used by the division for purposes of reviewing the adequacy of disclosure in the disclosure document.

(3) Before any sales are made to non-accredited investors in this state, one of the following conditions must be satisfied. The issuer and any person acting on its behalf shall have reasonable grounds to believe, and after making reasonable inquiry shall believe, that one of the following conditions are satisfied:

(a) The investment is suitable for the purchaser upon the basis of the facts, if any, disclosed by the purchaser as to the purchaser's other security holdings, financial situation and needs.

(b) The purchaser, either alone or with his or her purchaser representative(s), has such knowledge and experience in financial and business matters that he or she is or they are capable of evaluating the merits and risks of the prospective investment.

(4) Any offer, but not the sale, of a security made pursuant to § 20:08:07:25 by or on behalf of an issuer for the sole purpose of soliciting an indication of interest in receiving a disclosure document or prospectus, is allowed if all of the conditions are satisfied in § 20:08:07:27, testing-the-waters exemption.

(5) The following information shall appear on the cover page of any disclosure document or prospectus, in bold-face type:

(a) "NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE DOCUMENT OR PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE."; or

(b) "NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS DISCLOSURE DOCUMENT OR PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE."

S.D. Admin. R. 20:08:07:24

28 SDR 48, effective 10/10/2001; 30 SDR 211, effective 7/1/2004.

General Authority: SDCL 47-31B-203, 47-31B-605(a)(1), 47-31B-605(a)(3).

Law Implemented: SDCL 47-31B-203.

Note: The NASAA statements of policy can be located at www.nasaa.org under NASAA corporate finance.