February 7-8, 2017

Four Seasons Hotel Miami
1435 Brickell Avenue
Miami, FL 33131

The 35th Annual Federal Securities Institute is the Southeast’s premier educational forum on new Delaware corporate law developments and anticipated deals that can significantly impact corporate transactions in the current calendar year. Attendees will hear directly from top experts and authorities throughout the country, including regulators, judges, corporate counsel, plaintiff and defense litigators.

Morrison & Foerster Partner Anna Pinedo will speak on a panel entitled “Capital Raising Opportunities and Challenges in 2017: Being Public without Going Public” on Day 1 of the program.

For more information, or to register, please click here.

In this piece, which was included in a recent compendium published by Practising Law Institute (PLI) titled “Looking Ahead:  The Impact of the 2016 Election on Key Legal Issues,” we offer our thoughts on the likely areas of focus for the Securities and Exchange Commission.

Access here:  https://media2.mofo.com/documents/170100-securities-law-crystal-ball.pdf.


On January 17, Chair White delivered a speech at The Economic Club of New York, which was titled “The SEC after the Financial Crisis: Protecting Investors, Preserving Markets.”  Chair White commented on the Securities and Exchange Commission’s achievements during the financial crisis era, as well as other areas of focus, such as modernizing the regulation of asset management, addressing equity market structure issues, and related matters.  Chair White noted that an area for further work for the Commission is addressing financial responsibility rules for broker-dealers.  Chair White also noted that the Staff has prepared a public request for comment on Industry Guide 3 for financial institutions, which awaits the approval of the Commission for release.

In these, her last remarks as Chair, she commented on the role of the Commission, “for the SEC to be a strong market regulator, wiser from the experience of the financial crisis, we must be ready to use the full array of tools available to us – not relying on disclosure and enforcement alone.  And we must do so with a fierce independence in applying our expert, best judgment to protect investors, to maintain fair, orderly, and efficient markets, and to facilitate the formation of capital by the companies whose innovation and growth drives the American economy.”

Chair White also addressed the CHOICE Act and other measures designed to address agency rulemaking, noting:

“Another current trend pushing against the independence of the Commission are the legislative proposals from Congress seeking to remake our rulemaking process.  The House passed a bill just last week that would impose conflicting, burdensome, and needlessly detailed requirements regarding economic matters in Commission rulemaking that would provide no benefit to investors beyond the exhaustive economic analysis we already undertake.  These requirements would also prevent the Commission from responding timely to market developments or risks that could lead to a market crisis.  And elements of the CHOICE Act, which could be re‑introduced this session, would similarly undermine agency rulemaking as well as cripple our enforcement capabilities.  The next Commission must continue to challenge these efforts, and so should all of you.”

The full text is available here:  https://www.sec.gov/news/speech/the-sec-after-the-financial-crisis.html.

The SEC and the SEC Staff had a busy second half of 2016.  In late 2016, the SEC Staff issued guidance principally in the form of C&DIs on various topics.  Join Morrison & Foerster for our two-part recap of items you may have missed.

Session One
Wednesday, February 8, 2017
11:00 a.m. – 12:00 p.m. ET

During our first session, we will review Regulation A:  what do we know about how the exemption is working?; Regulation Crowdfunding; C&DIs on Regulation Crowdfunding; FINRA crowdfunding enforcement matter; Rule 147/Rule 504; Integration C&DI; C&DIs on Rule 701; and Guidance on Rule 144.


Session Two
Thursday, February 9, 2017
11:00 a.m. – 12:00 p.m. ET

During our second session, we will review C&DIs on Rule 144A, FPIs, and Regulation S.  We also will discuss guidance on Exxon Capital exchange offer representations; guidance on shortened tenders; and recent Trust Indenture Act related court cases.


CLE credit is pending for California and New York.

To register for this teleconference series, or for more information, please click here.

SEC disclosure requirements have prompted debate among key stakeholders regarding how to strike the right balance, weighing investor protection concerns and regulatory burdens. Partner Anna Pinedo is quoted in MergerMarket’s report on disclosure effectiveness. Read the report here: http://mergermarketgroup.com/wp-content/uploads/2016/12/Vintage-Group_Newsletter-3-2016_Final-LR.pdf.

As we have reported in other blog posts, many successful privately held companies are able to raise funds from institutional investors at attractive valuations and defer their IPOs. While the exuberance regarding valuations may have tempered some in 2016, approximately $41 billion was raised in late stage private placements. As in prior years, tech companies raised the majority of the proceeds. There were fewer deals completed in 2016 compared to 2015, as noted in our infographic, which you can access here.  It is difficult to predict whether this year will mark a turning point in which we see some unicorns undertake IPOs.

The Chair of the Securities and Exchange Commission Mary Jo White recently commented on the significance of high-quality accounting standards.  The speech noted the need to support continued work toward the globally accepted accounting standards.  In recent months, representatives of the Office of the Chief Accountant within the Commission had noted that the effort to move toward IFRS was not considered a near-term priority.  Chair White offered compelling statistics.  For example, she noted that U.S. investors invest directly in the securities of many foreign private issuers that apply IFRS in filings with the Commission.  As of September 2016, these companies alone represented a worldwide market capitalization in excess of $7 trillion across more than 500 companies.  As a result, Chair White noted that work toward continued convergence of standards and priorities between the FASB and the IASB should be encouraged.   See the full speech at:  https://www.sec.gov/news/statement/white-2016-01-05.html.

In 2016, volatility and private-public market valuation dislocations may have kept some emerging companies and unicorns from pursuing IPOs.  However, the outlook for the IPO market in 2017 is positive.  We understand that going public is a defining step.  We believe that’s why companies considering an IPO seek expert advice.  We invite you to access some of our many IPO related resources, including:

In addition, this blog will continue to provide a discussion of other financing alternatives, as well as timely updates on the capital markets and on securities developments.

The Division of Economic and Risk Analysis (DERA) of the Securities and Exchange Commission published a study recently that reviews, among other things, the performance of and the returns of investing in OTC stocks.  The study notes that there have been many studies and there is a wealth of data relating to the performance of NYSE- and Nasdaq-listed securities.  These securities tend to be held principally by institutional investors.  By contrast, there has been less analysis undertaken relating to OTC stocks, which tend to be held principally by retail investors.  While the data and analysis included in the study is on its own quite interesting, we find it particularly relevant in light of the many calls for the establishment of a venture exchange.   The Financial CHOICE Act, for example, includes among its many provisions, a section that relates to the establishment of venture exchanges.  The analysis also is relevant in evaluating whether the OTC markets provide a useful market for the securities of companies that undertake Regulation A offerings.

The study confirms that OTC stocks are less liquid than those listed on national securities exchanges.  The study also confirms a correlation between the availability of information about listed companies and their liquidity—with greater liquidity seen for those companies as to which public disclosures are available.  The study seems to indicate that the returns of OTC stocks are typically negative and that often these stocks are subject to alleged market manipulation efforts.  The study notes that “up-listing,” or moving from the OTC markets to a national securities exchange is quite uncommon, with fewer than 9% of companies transitioning during the study period (2001 to 2010) and less than 1% from the Pink Sheets (now OTC Markets) to a national securities exchange.

The study is available here:  https://www.sec.gov/dera/staff-papers/white-papers/White_OutcomesOTCinvesting.pdf.

In a year of significant volatility, it is not surprising that there was increased reliance on PIPE (private investment in public equity) transactions.  Traditionally, PIPE transactions have provided a useful capital-raising alternative when the public markets are inhospitable.  During this past year, energy companies relied on PIPE transactions in order to recapitalize their companies and many of these transactions resulted in change of control.  We summarize the PIPE activity for 2016 in our infographic.