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Category Archives: Private Placements

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SEC Investor Alert on Unregistered Offerings

Posted in Private Placements, SEC News

Earlier this week, the SEC’s Office of Investor Education issued an Investor Alert that highlights some of the warning signs for investors that an unregistered offering may be an investment scam.  The alert is available here:  http://www.sec.gov/oiea/investor-alerts-bulletins/ia_unregistered.html#.U-Pk66XD9l4.

New Senate Bill Introduced to Clarify Definition of General Solicitation

Posted in General Solicitation, Private Placements

The text of S. 2498, introduced by Senator Murphy in late June, was finally released.  The bill is titled the “HALOS Act”, or “Helping Angels Lead our Startups Act.”  Angel investors have expressed concerns regarding the definition of the term “general solicitation” following the adoption of Rule 506(c), which permits issuers to use general solicitation… Continue Reading

SEC Staff Provides Rule 506(c) Verification Guidance

Posted in Private Placements, Rule 506 Rulemaking, SEC News

The SEC Staff recently provided further guidance on the provisions of Rule 506(c) of Regulation D which permit the use of general solicitation and general advertising when sales are made only to accredited investors and the issuer verifies the accredited investor status of the purchasers.  The Staff has now clarified certain aspects of the verification… Continue Reading

Limited Corporate Financing Brokers

Posted in Private Placements

FINRA published Regulatory Notice 14-09 (available:  https://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p449586.pdf) to solicit comments regarding a series of new rules that would be applicable to firms that perform certain limited functions.  FINRA is proposing to establish a new, reduced regulatory framework for firms that advise issuers on debt and equity private placements with institutional investors or provide certain advisory… Continue Reading

Reg D and Private Placements Boot Camp

Posted in Events, Private Placements, Rule 506 Rulemaking

On March 13-15, 2014, Morrison & Foerster partner Marty Dunn will participate on the faculty of an ALI CLE course called “Regulation D Offerings and Private Placements.” The course will focus on private placements and the new regulatory environment as a result of the JOBS Act. The course will be held in Paradise Valley, AZ,… Continue Reading

Private Placements and Other Financing Alternatives 2014

Posted in Events, Private Placements

On March 25-26, 2014, Morrison & Foerster partner Anna Pinedo will chair a PLI conference entitled Private Placements and Other Financing Alternatives 2014. This is the first in-person PLI conference that will discuss the proposed crowdfunding rules, the proposed Reg A+ rules, and the practical issues emerging in connection with Rule 506 offerings using general… Continue Reading

SEC Staff Provides More Guidance on Rule 506(d)

Posted in Private Placements, Rule 506 Rulemaking, SEC News

On January 3, 2014 the Staff of the SEC’s Division of Corporation Finance updated the Securities Act Rules Compliance and Disclosure Interpretations to address a number of interpretive issues under the “bad actor” disqualification provisions that are now a part of Rule 506 of Regulation D.  The new interpretations are as follows: Question 260.28 Question:… Continue Reading

The Value of Relationships

Posted in JOBS Act News, Private Placements, Rule 506 Rulemaking

Maybe, given that we’re living in the age of social media with Facebook “friends” and LinkedIn contacts, it shouldn’t be all that surprising that the value of relationships may appear to have diminished.  In fact, in many discussions with clients about Rule 506(b) and Rule 506(c), conversations seem to assume that the principles of “preexisting… Continue Reading

SEC Announces Agenda and Panelists for Small Business Forum

Posted in Events, JOBS Act News, Private Placements, Rule 506 Rulemaking, SEC News

The SEC has announced the agenda and panelists for its annual Small Business Forum on November 21, 2013.  The event will begin at 9 a.m. at the SEC (and via webcast), and will include two morning panel discussions. The first panel will focus on evolving practices in the new world of Regulation D exempt offerings…. Continue Reading

SEC Staff Provides Rule 506(c)/Rule 144A Guidance

Posted in Private Placements, Rule 506 Rulemaking, SEC News

Today, the SEC Staff in the Division of Corporation Finance updated the Securities Act Rules Compliance and Disclosure Interpretations to provide a number of new interpretations regarding Rule 506(c) and revised Rule 144A.  The Staff updated Sections 138 and 260 of the Securities Act Rules Compliance and Disclosure Interpretations, which can be found at: http://www.sec.gov/divisions/corpfin/guidance/securitiesactrules-interps.htm.  

NASAA’s Perceived Threats

Posted in Private Placements

In its annual list of risks posed to investors and small businesses, NASAA once again identifies private offerings.  NASAA notes that “[f]raudulent private placement offerings continue to rank as the most common product or scheme leading to investigations and enforcement actions by state securities regulators.”  NASAA notes that the relaxation of the ban on general… Continue Reading

SEC Re-Opens Comment Period for Regulation D Proposal

Posted in Private Placements, Rule 506 Rulemaking

On September 27, 2013, the SEC published Release No. 33-9458 to re-open the comment period for its proposed amendments to Regulation D, Form D and Securities Act Rule 156.  The comment period for the proposals, which were issued on July 10, 2013, had expired on September 23, 2013.  The new comment period will run for 30 days following publication of the… Continue Reading

General Solicitation Solution

Posted in Private Placements, Rule 506 Rulemaking

Today is a big day for issuers seeking to raise capital in private placements.  For 80 years, issuers have been constrained in their private capital raising efforts: allowed only to reach out to those potential investors with whom the issuer or the broker dealer engaged to assist with the offering have a pre-existing relationship.  Today,… Continue Reading

FINRA Investor Alert Highlights Private Placement Risks

Posted in Private Placements

FINRA posted today an investor alert that highlights risks relating to private placements.  The alert summarizes the differences between private placements and registered offerings, and underscores FINRA’s concerns about fraud and sales abuse, long holding periods and lack of issuer information.  This alert was issued six days prior to the effectiveness of amendments lifting the… Continue Reading

News You Can Use

Posted in JOBS Act News, Private Placements, Rule 506 Rulemaking

Morrison & Foerster lawyers Anna Pinedo, David Lynn, Nilene Evans and Bradley Berman have prepared several standard representations, warranties and covenants relating to the use of general solicitation under Rule 506(c) offerings and to the bad actor disqualification provision of Rule 506(d). To view the resources, please visit: General Solicitation (Rule 506(c)) Representations and Covenants… Continue Reading

FINRA Updates Private Placement Form

Posted in Private Placements

In its continuing quest to improve member firm due diligence in private placements, thereby enhancing investor protections (See our posts on July 7, July 24 and August 6, 2013), on August 19, 2013, FINRA issued Regulatory Notice 13-26 about the updated Private Placement Form (a copy of which is attached to the Notice) that firms… Continue Reading

FINRA Actions and the Due Diligence Obligations of Broker-Dealers in Private Placements

Posted in Private Placements

Private placements and the due diligence obligations of broker-dealers in such transactions have recently come under increased scrutiny from FINRA as part of a broader trend reflected most notably in the filing requirements for private placements that went into effect on December 3, 2012 (FINRA Rule 5123). This trend of increased scrutiny also is likely… Continue Reading

FINRA Cracks Down on Private Placements

Posted in Private Placements, Rule 506 Rulemaking

Earlier this year, FINRA announced that the policing of private placements would be its regulatory priority for 2013.  However, FINRA enforcement actions relating to private placements have been dramatically increasing since 2010, as the chart below indicates. With the adoption of FINRA Rule 5123 (requiring broker-dealers to file with FINRA copies of offering documents used… Continue Reading

Private Offerings: Questions that Might Frequently be Asked….

Posted in Private Placements, Rule 506 Rulemaking

As clients begin to think about future private offerings once the SEC’s final rule becomes effective, a number of interesting questions are emerging concerning offerings that take place sequentially, or that may be integrated.  In this alert, we provide our initial reactions to some of these questions:  http://www.mofo.com/files/Uploads/Images/130723-Private-Offerings.pdf. We’ll be updating our Q&A as we… Continue Reading

Webcast: What do the New General Solicitation Rules Really Mean for Private Capital Raising?

Posted in Events, Private Placements, Rule 506 Rulemaking

Morrison & Foerster, together with Practical Law Company, presented a webcast on the new general solicitation rules. The webcast analyzed the impact of the SEC’s removal of the ban on general solicitation in certain private offerings that was required by the JOBS Act. The program also discussed conducting Regulation D and 144A offerings going forward,… Continue Reading

Before You Start That General Solicitation…

Posted in Private Placements, Rule 506 Rulemaking

This week, the SEC approved long-awaited amendments relaxing the prohibition against general solicitation, as required under Title II of the JOBS Act.  These amendments will liberalize the ability of broker-dealers to advertise and market private placements by removing the prohibition against general solicitation in offerings conducted pursuant to new Rule 506(c).  However, following the effective… Continue Reading

SEC Posts Regulation D Rulemaking Releases

Posted in JOBS Act News, Private Placements, Rule 506 Rulemaking, SEC News

The SEC has posted the following releases for the rulemaking approved at today’s Open Meeting Adopting Releases: Disqualification of Felons and Other “Bad Actors” from Rule 506 Offerings Eliminating the Prohibition Against General Solicitation and General Advertising in Rule 506 and Rule 144A Offerings Proposing Release: Amendments to Regulation D, Form D and Rule 156… Continue Reading

JOBS Act Webcast: SEC’s New Regime for Private Placements

Posted in Events, Private Placements, Rule 506 Rulemaking, SEC News

On Wednesday, July 10, the Securities and Exchange Commission will consider adopting amendments to its rules governing private placements of securities. The amendments will likely eliminate (a) the prohibition on general solicitation and general advertising for private placements to accredited investors under Rule 506 and (b) the prohibition on offers to non-qualified institutional buyers in… Continue Reading