Directed Selling Efforts
Directed Selling Efforts are activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the U.S. market for securities offered in reliance on Regulation S.
How it works
Rule 902(c) defines the concept broadly and gives examples and exclusions. Advertising in a publication with general U.S. circulation that refers to the Regulation S offering can be a Directed Selling Effort. The rule also identifies activities that are not treated as directed selling efforts, including specified legally required advertisements, certain contacts and qualifying tombstone advertisements that satisfy detailed conditions.
The rule focuses on U.S. market conditioning
Activity can be problematic when its purpose or reasonably expected effect is to stimulate the U.S. market for the Regulation S securities.
Advertising is a core example
A publication with general U.S. circulation can create a directed-selling-efforts issue when the advertisement refers to the offshore offering.
Some required notices are excluded
Legally mandated advertisements can fall outside the definition when they contain no more than required information and include the necessary legend.
Limited tombstone advertising can qualify for an exclusion
The rule permits specified tombstone advertisements when circulation, legend and content restrictions are satisfied.
Worked example: global campaign
An issuer launches an online campaign accessible worldwide and specifically targets U.S. investors with messages about the offshore offering. The U.S.-targeted component can be Directed Selling Efforts.
Why digital marketing needs care
Online distribution can reach U.S. audiences even when the offering itself is intended for foreign investors.
Common mistakes
Assuming offshore purchasers cure U.S. marketing; treating every press release as prohibited; ignoring publication-circulation tests; and failing to separate ordinary corporate publicity from offering-specific market conditioning.
Example
An issuer conducts an offshore Regulation S offering but places promotional advertisements in a widely circulated U.S. financial publication encouraging interest in the offered securities. That activity can undermine the safe harbor as Directed Selling Efforts.
Example
An issuer conducts an offshore Regulation S offering but places promotional advertisements in a widely circulated U.S. financial publication encouraging interest in the offered securities. That activity can undermine the safe harbor as Directed Selling Efforts.
Professional note
The issue is market conditioning, not merely whether a formal purchase order came from the United States. Marketing activity can create a Regulation S problem even when actual purchasers are offshore.
Related terms
- Registration Statement
A registration statement is a filing with the SEC that provides required disclosures when a security or securities offering is registered under federal securities laws.
- Transfer Restriction
A Transfer Restriction is a contractual, charter-based, security-based or legal limitation on a holder’s ability to sell, assign, pledge, gift or otherwise transfer specified securities or ownership interests.
- Offshore Transaction
An Offshore Transaction is a Regulation S offer or sale that satisfies the rule’s location conditions, including that the offer is not made to a person in the United States and the buyer-location or offshore-market test is met.
Related ROIStreet guides
- What Is the Rule of 55?
The Rule of 55 is an informal name for a federal exception to the 10% additional tax on certain early retirement-plan distributions. It can apply when a worker separates from the employer maintaining a qualified plan in or after the calendar year the worker reaches age 55. This guide explains the age test, eligible plans, IRA differences, taxes, rollovers and special public-safety rules.
- Stocks vs. Bonds: A Practical Comparison
Stocks represent ownership in companies; bonds generally represent lending to an issuer. This comparison explains how the two differ in return sources, volatility, income, maturity, priority, credit risk and liquidity.
- What Is a 401(k) Recordkeeper?
A 401(k) recordkeeper maintains the participant-level ledger: contributions, investments, gains and losses, fees, loans, distributions and account balances. The recordkeeping role is distinct from holding plan assets, writing the plan document or serving as the legal plan administrator, even when one financial company bundles several of those services.
- What Compensation Counts for a 401(k)?
There is no single universal 401(k) compensation number. A plan can use different definitions for deferrals, matching, profit sharing and testing, while statutory definitions govern limits such as Sections 401(a)(17), 414(s) and 415.