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Tag Archives: general solicitation


Posted in SEC News

Recently, Craig Lewis, the Chief Economist and Director of the SEC’s Division of Economic and Risk Analysis, commented (see speech at:  http://www.sec.gov/News/Speech/Detail/Speech/1370541497283#.U08MNVTD_zY ) on the economic impact of various JOBS Act reforms, or the effects on “efficiency, competition, and capital formation” (ECCF). In his remarks, Lewis notes that smaller companies may face informational frictions that… Continue Reading

Is Any News Article a General Solicitation?

Posted in SEC News

Many assume that if a news article discussing an issuer is published at or around the time of an offering that would necessarily constitute a general solicitation.  Over time, however, the Staff of the Securities and Exchange Commission has provided guidance on this matter–both in the context of (traditional) private offerings and also of public… Continue Reading

The Value of Relationships

Posted in JOBS Act News, Private Placements, Rule 506

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

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

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

Posted in Rule 506

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

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 Issues Investor Bulletins Relating to General Solicitation and Accredited Investors

Posted in Rule 506, 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

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

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

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

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

Private Equity Structuring: The Basics

Posted in Crowdfunding, Events, SEC News

On Thursday, October 3, 2013, Morrison & Foerster partner Anna Pinedo will participate in an NYC Bar CLE conference. She will be speaking on a panel entitled “Compliance and New SEC Regulatory Opportunities for Private Equity Firms and the Ethical Implications” focusing on practical considerations and legal and compliance issues arising with general solicitation, crowdfunding… Continue Reading

Reminders for Issuers That Intend to Use General Solicitation

Posted in Rule 506

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

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

September 17 Meeting of SEC Advisory Committee on Small and Emerging Companies

Posted in Advisory Committee on Small and Emerging Companies

Today, the SEC announced the agenda for the upcoming meeting of the Advisory Committee on Small and Emerging Companies.  The discussion is expected to include the final rules adopted by the Commission in July to eliminate the general solicitation ban and disqualify bad actors from certain securities offerings and its proposal for further amendments to… Continue Reading

News You Can Use

Posted in JOBS Act News, Private Placements, Rule 506

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

Rule 15A-6 and Foreign Broker-Dealers

Posted in Rule 506

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

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

SEC Rule 506 Amendments and Blue Sky

Posted in Rule 506

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

General Solicitation Checklist

Posted in Rule 506

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.

FINRA Cracks Down on Private Placements

Posted in Private Placements, Rule 506

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

GAO Study on the Accredited Investor Standard

Posted in Accredited Investor Standard, JOBS Act News

The Dodd-Frank Act mandated that the GAO conduct a study regarding the “accredited investor” standard in order to understand whether the existing criteria serves the intended purpose or whether alternative criteria should be considered.  The report was recently released and can be accessed here:  http://gao.gov/products/GAO-13-640?source=ra.  In addition to reviewing data, the GAO conducted interviews with… Continue Reading

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

Posted in Events, Private Placements, Rule 506

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

Advertising Restrictions Apply to Commodity Pools

Posted in Rule 506

In prior posts, we have noted that the relaxation of the ban on general solicitation in no way relieves certain registered entities of their obligations to comply with regulations related to advertising or promotional materials.  In fact, relying on general solicitation will create new compliance hurdles for registered entities.  For example, registered broker-dealers must comply… Continue Reading