South Dakota Administrative Rules › Title 20 - PUBLIC SAFETY › Article 20:08 - SECURITIES › Chapter 20:08:07 - Notice filings for covered securities and registration exemptions › Section 20:08:07:27 - Testing-the-waters exemption

Current through Register Vol. 51, page 10, July 15, 2024
Solicitations of interest prior to filing with the division is allowed if there is compliance with this section.
(1) An offer, but not a sale, of a security made by or on behalf of an issuer for the sole purpose of soliciting an indication of interest in receiving a disclosure document or prospectus (or its equivalent) for such security is exempt from SDCL  47-31B-301 if all of the following conditions are satisfied:
(a) The issuer intends to conduct its offering in this state pursuant to the intrastate limited offering rule, §
										20:08:07:25.
(b) Ten business days prior to the initial solicitation of interest under this rule, the issuer files with the director a Solicitation of Interest Form along with any other materials to be used to conduct solicitations of interest, including the script of any broadcast to be made and a copy of any notice to be published,
(c) Five business days prior to usage, the issuer files with the director any amendments to the foregoing materials or additional materials to be used to conduct solicitations of interest, except for materials provided to a particular offeree pursuant to a request by that offeree.
(d) No Solicitation of Interest Form, script, advertisement, or other material which the issuer has been notified by the director not to distribute is used to solicit indications of interest.
(e) Except for scripted broadcasts and published notices, the issuer does not communicate with any offeree about the contemplated offering unless the offeree is provided with the most current Solicitation of Interest Form at or before the time of the communication or within five days from the communication.
(f) During the solicitation of interest period, the issuer does not solicit or accept money or commitment to purchase securities.
(g) No sale is made until seven days after delivery to the purchaser of a final disclosure document or prospectus, or in those instances in which delivery of a preliminary prospectus is allowed hereunder, a preliminary prospectus.
(h) The issuer does not know, and in the exercise of reasonable care could not know that the issuer or any of the issuer's officers, directors, ten percent shareholders, or promoters:
(1) Has filed a registration statement which is the subject of a currently effective registration stop order entered pursuant to any federal or state securities law within five years prior to the filing of the Solicitation of Interest Form.
(2) Has been convicted within five years prior to the filing of the Solicitation of Interest Form of any felony or misdemeanor in connection with the offer, purchase, or sale of any security or any felony involving fraud or deceit, including forgery, embezzlement, obtaining money under false pretense, larceny, or conspiracy to defraud.
(3) Is currently subject to any federal or state administrative enforcement order or judgment entered by any state securities administrator or the Securities and Exchange Commission within five years prior to the filing of the Solicitation of Interest Form or is subject to any federal or state administrative enforcement order or judgment entered within five years prior to the filing of the Solicitation of Interest Form in which fraud or deceit, including making untrue statements of material facts and omitting to state material facts, was found.
(4) Is subject to any federal or state administrative enforcement order or judgment which prohibits, denies, or revokes the use of any exemption from registration in connection with the offer, purchase, or sale of securities.
(5) Is currently subject to any order, judgment, or decree of any court of competent jurisdiction temporarily or preliminarily restraining or enjoining, or is subject to any order, judgment, or decree of any court of competent jurisdiction, permanently restraining or enjoining, such party from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with the state entered within five years prior to the filing of the Solicitation of Interest Form. The prohibitions listed above do not apply if the person subject to the disqualification is duly licensed or registered to conduct securities related business in the state in which the administrative order or judgment was entered against such person or if the broker-dealer employing such party is licensed or registered in this state and the form B-D filed with this state discloses the order, conviction, judgment, or decree relating to such person. No person disqualified under this subsection may act in a capacity other than that for which the person is licensed or registered. Any disqualification caused by this section is automatically waived if the agency which created the basis for disqualification determines upon a showing of good cause that it is not necessary under the circumstances that the exemption be denied.