Recently posted Compliance and Disclosure Interpretations follow. Question 260.14 Question: When is an issuer required to determine whether bad actor disqualification under Rule 506(d) applies? Answer: Rule 506(d) disqualifies an offering of securities from reliance on a Rule 506 exemption from Securities Act registration. Issuers must therefore determine if they are subject to bad actor… Continue Reading
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
On Thursday, December 12, 2013, Morrison & Foerster partner Anna Pinedo will participate in the PLI seminar “Understanding the Securities Laws 2013”. Ms. Pinedo will give a presentation entitled “Securities Act Exemptions/Private Placements” which will discuss: exempt securities versus exempt transactions; regulation D offerings and recent changes, including the removal of the ban on general… Continue Reading
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
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
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.
Shortly after the Securities and Exchange Commission (SEC) adopted the final rule relaxing the prohibition against general solicitation in connection with offerings made pursuant to new Rule 506(c) and Rule 144A, we provided our perspective on various interpretative questions that might arise as issuers and financial intermediaries began to avail themselves of the new offering… Continue Reading
Last Monday, the 80-year ban on the use of general solicitation in certain exempt securities offerings was relaxed. General solicitation can now be used in private offerings conducted under Rule 506(c) of Regulation D and Rule 144A under the Securities Act. While the dust has yet to settle, we have already seen several examples of… Continue Reading
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
In September 2013, the SEC’s Office of Investor Education and Advocacy issued an alert for investors relating to the SEC’s new general solicitation rules. In addition, a second bulletin provides details on the definition of “accredited investor.” These documents are available on the SEC’s website at the following links: http://www.sec.gov/investor/alerts/ia_solicitation.pdf http://www.sec.gov/investor/alerts/ib_accreditedinvestors.pdf The general solicitation alert… Continue Reading
Quite a number of collective investment vehicles, including funds, and other entities that may not be viewed by the CFTC as “operating companies” may, in the absence of specific relief or an available exemption, be a “commodity pool.” Many entities rely on the CFTC’s Rule 4.13 de minimis exemption (given their limited use of swaps… Continue Reading
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
The SEC guide (see: http://www.sec.gov/info/smallbus/secg/bad-actor-small-entity-compliance-guide.htm) provides useful guidance for firms seeking to comply with the bad actor rule, which becomes effective September 23.
The SEC recently approved FINRA’s rule change to permit dissemination of trade data for 144A bonds on TRACE (see: http://www.sec.gov/rules/sro/finra/2013/34-70345.pdf). FINRA will publish a regulatory notice within 60 days of the rule approval, which was earlier this month, providing additional details. As we previously reported in an earlier post, the relaxation of the prohibition on… Continue Reading
In an earlier post, we commented on some considerations for issuers and their advisers in respect of offerings made in reliance on Rule 506 after September 23, 2013. Broker-dealers that are serving as financial intermediaries or placement agents in connection with private offerings also should plan ahead and take into account that, with the effective… Continue Reading
On Thursday, October 3, 2013, Morrison & Foerster partner Anna Pinedo will participate in a complimentary Bloomberg Law Event entitled “Outlook on Securities—The JOBS Act”. The seminar will focus on the latest developments in JOBS Act rulemaking by the Securities and Exchange Commission. For more information about the event, and to register, please visit: http://about.bloomberglaw.com/events/outlook-on-securities-the-jobs-act/.
The new SEC “bad actor” provisions of Rule 506(d) become effective on September 23, 2013. Investment banks, which monitor FINRA compliance by their professionals, must ensure that their compliance systems capture all the potentially new requirements of Rule 506(d). The FINRA disclosure obligations of Forms U4 and U5 are more extensive than the Rule 506(d)… Continue Reading
Privately held operating company issuers (as distinguished from private funds) should plan ahead if they intend to use general solicitation for Rule 506(c) offerings after September 23, 2013. Here are just a few considerations that issuers may want to bear in mind: From the outset, obtain all of the information required to identify whether there… Continue Reading
With general solicitation and general advertising on the horizon, private fund advisers should review their policies and procedures to determine whether they are reasonably designed to prevent the use of fraudulent or misleading advertisements, said Norm Champ, the Director of the SEC’s Division of Investment Management, in remarks today before the Practicing Law Institute in… Continue Reading
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
The SEC recently adopted final rules relaxing the prohibition on general solicitation and general advertising for certain private placements under Rule 506 of Regulation D and for offerings pursuant to Rule 144A under the Securities Act of 1933, as amended, which will become effective on September 23, 2013. As a result, it is a good… Continue Reading
The Securities and Exchange Commission took some long-awaited action in the area of private offerings at its open meeting on July 10, 2013. The Commission issued two releases adopting final rules (i) to eliminate the prohibition against general solicitation and general advertising in offerings conducted pursuant to Rule 506 of Regulation D under the Securities… Continue Reading
This Checklist, prepared by Anna Pinedo, outlines early practical considerations in preparation for the changes to general solicitation and general advertising rules for unregistered offerings under Regulation D and Rule 144A as required by the JOBS Act. The Checklist may be viewed here.
The SEC’s proposed changes to private offerings, including proposed changes to Form D, Form D filing requirements, and temporary requirements to submit general solicitation materials, already are generating comment. Reps. McHenry and Garrett have requested that, among other things, the SEC clarify that issuers will be able to rely on new Rule 506(c) following the… Continue Reading