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Category Archives: Rule 506 Rulemaking

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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

SIFMA Guidance on Investor Verification

Posted in Rule 506 Rulemaking

SIFMA has issued a Memorandum intended to provide broker-dealers and advisers with guidance regarding procedures for investor verification in connection with offerings made pursuant to Rule 506(c). Morrison & Foerster has signed on to support the procedures, which are useful examples of possible approaches to verification.  The white paper and forms may be viewed here…. 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

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

A Year End Look at the JOBS Act

Posted in Crowdfunding, IPO On-Ramp, JOBS Act News, Regulation A+, Rule 506 Rulemaking

2013 has proven to be a strong year for IPOs.  According to a recent PWC study, total IPO volume for 2013, as of December 17, reached 237 public company debuts, which is an increase over 2012.  The overwhelming majority of these IPOs were completed by issuers that qualified as emerging growth companies.  (The full details… Continue Reading

Regulation D/Form D Proposed Amendments

Posted in Rule 506 Rulemaking

On the same day that the SEC adopted changes to Rule 506 and Rule 144A in order to relax the prohibition against general solicitation, the SEC proposed for comment amendments to Form D, Regulation D and Rule 156.  These proposed rules were met with an extraordinary number of comments given that many felt that the… Continue Reading

Bad Actor Guidance from the SEC Staff – UPDATED

Posted in Rule 506 Rulemaking

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

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

Understanding the Securities Laws 2013

Posted in Events, Regulation A+, Rule 506 Rulemaking

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

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.  

Private Offerings: Questions that Might Frequently be Asked Sometime Soon (Part II)

Posted in Rule 506 Rulemaking

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

A General (Solicitation) Lay of the Land

Posted in Rule 506 Rulemaking

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

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

SEC Issues Investor Bulletins Relating to General Solicitation and Accredited Investors

Posted in Rule 506 Rulemaking, SEC News

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

De Minimis Exemption Inhibiting Funds

Posted in Rule 506 Rulemaking

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

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

TRACE Dissemination of 144A Data

Posted in Rule 506 Rulemaking

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

Reminders for Broker-Dealers Regarding Rule 506 Offerings

Posted in Rule 506 Rulemaking

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

Bloomberg BNA JOBS Act Event

Posted in Events, Rule 506 Rulemaking

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/.

How do the SEC “Bad Actor” Disqualifying Events Fit with FINRA Forms U4 and U5?

Posted in Rule 506 Rulemaking, SEC News

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

Reminders for Issuers That Intend to Use General Solicitation

Posted in Rule 506 Rulemaking

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

SEC to Focus on Private Fund Adviser Compliance Procedures in Rule 506(c) Offerings

Posted in Rule 506 Rulemaking

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