What does the Bad Actor Provision in Rule D prohibit?

The Bad Actor Provision in Rule D is primarily designed to protect investors by prohibiting certain individuals with a history of felonies, or other serious misconduct, from participating in private placements. This provision helps to ensure that investors are not solicited by those who have a documented history of participation in illegal or unethical activities, thereby enhancing the integrity of the securities market.

This focus on maintaining investor confidence is crucial, as allowing individuals with serious legal issues to be involved in private placements could lead to significant risks for investors. The Bad Actor Provision thus serves as a safeguard against financial fraud and misrepresentation.

The other options do not align with the intent or specifics of the Bad Actor Provision. Public offerings are not restricted by this provision; rather, the provision specifically targets participants in private placements with disqualifying legal histories. Companies are still allowed to disclose their financial information under regulatory requirements, and investors can participate in private placements unless they themselves are considered bad actors, which the Bad Actor Provision explicitly addresses.