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Maverick Company is a nonpublic company that wants to sell $22.7 million of preferred shares...

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Finance

Maverick Company is a nonpublic company that wants to sell $22.7 million of preferred shares under Rule 506 of Regulation D of the Securities Act of 1933. Maverick plans to sell to 42 investors, including 10 mutual funds. The other 32 investors are individual investors with various levels of experience (from zero to extensive) in making securities investment decisions. Maverick also hopes to attract additional investors using an advertisement in The Wall Street Journal. Required: May Maverick use Rule 505 and/or 506?

Discuss. Assuming it can use Rule 506, what disclosure must Maverick make to the investors? Discuss. Would Rule A+ be better than Rule 506? Discuss.

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