NASDAQ Private Markets and Morrison & Foerster recently described the process for verifying the status of investors when a company chooses to use general solicitation to conduct a Rule 506(c) offering.  In this video blog, Anna Pinedo reviews the SEC Staff’s principles-based guidelines for verification of an accredited investor and also non-exclusive methods for verification.

To watch this video, visit the NASDAQ Private Markets Resource Center.

 

NASDAQ Private Markets and Morrison & Foerster recently discussed the conditions a private company must satisfy in order to rely on Rule 506 for a private placement.  In this video blog, Anna Pinedo highlighted general reminders related to conducting a private placement; general solicitation considerations; approaching accredited and non-accredited investors; bad actor requirements; and Form D filings.

To watch this video, visit the NASDAQ Private Markets Resource Center.

 

NASDAQ Private Markets and Morrison & Foerster recently spoke about the process for a company that chooses to use general solicitation when raising capital in reliance on Rule 506.

In this video blog, Anna Pinedo discusses the types of communications that constitute general solicitation; reviews the SEC Staff’s guidance on general solicitation; and describes the heightened compliance requirements associated with Rule 506(c) transactions.

To watch this video, visit the NASDAQ Private Markets Resource Center.

NASDAQ Private Markets and Morrison & Foerster recently reviewed Rule 506.  In this video blog, Anna Pinedo focuses on the changes to Rule 506 brought about by the JOBS Act, Rule 506(b) and the conditions for the safe harbor, Rule 506(c) and the additional requirements associated with the use of general solicitation, and market practice.

To watch this video, visit the NASDAQ Private Markets Resource Center.

NASDAQ Private Markets and Morrison & Foerster recently discussed Section 4(a)(2), the statutory private placement exemption, and Rule 506, the most popular Regulation D safe harbor.  In this video blog, Anna Pinedo discusses the requirements for an exemption from registration, the participants in a typical private placement, and the documentation and process.

To watch this video, visit the NASDAQ Private Markets Resource Center.

 

November 8-10, 2017

The Roosevelt Hotel
45 East 45th Street
New York, NY 10017

PLI’s 49th Annual Institute on Securities Regulation will be composed of seasoned individuals from private practice, investment banking, accounting firms, corporations, and government agencies. These experts will put the developments of the past year into proper perspective, and prepare you for 2018 and beyond.

Partner Anna Pinedo will participate in a panel discussion entitled “Private Offerings and Public Offerings by Smaller Reporting Companies” on day one of the program. Topics will include:

  • General solicitation and private offerings under Rule 506;
  • Integration of private to private and private to public offerings – what will it take to fix the uncertainty?;
  • Regulation A and Crowdfunding – are they working and where do they work the best?; and
  • Public capital raising by smaller reporting companies – what’s on the reform agenda?

Senior Of Counsel Marty Dunn will participate in a panel discussion entitled “Securities Law Grab Bag: Your Frequent Questions Answered” on day two of the program. Topics will include:

  • Our answers and analysis for important securities and compliance questions;
  • Avoiding the pitfalls in the offering process;
  • Making the right disclosure decisions under common (and not so common) scenarios;
  • Approaching the compliance function: our best practice answers;
  • Frequent governance considerations and the best ways to handle them; and
  • Do we have to close the trading window?

PLI will provide CLE credit.

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

On September 20, 2017, the staff of the SEC’s Division of Corporation Finance issued revised compliance and disclosure interpretations (“C&DIs”) for purposes reflecting updates for prior amendments to Securities Act Rules 147 and 504, the repeal of Securities Act Rule 505 and non-substantive changes throughout the Rule 147 and Regulation D C&DIs based on the SEC’s current rules.  Highlights of the C&DIs (Questions 257.08, 258.03, 258.05, 258.06 and 541.03) include, among other things, the following guidance:

  • A Securities Act Rule 506 offering will not lose “covered security” status under Securities Act Section 18 if an issuer fails to file a Form D with the SEC.
  • Rule 504 is available to a private fund excluded from the definition of “investment company” by Section 3(c)(1) or 3(c)(7) of the Investment Company Act so long as the offering under Rule 504 is not a “public offering.”
  • The example of the calculation of the aggregate offering price provided in the instruction to paragraph (b)(2) of Rule 504 does not contemplate integration of two or more offerings.
  • Rule 504 is not available to any issuer that is subject to disqualification under Rule 506(d) on or after January 20, 2017. On or after this date, issuers must determine if they are subject to bad actor disqualification any time they are offering or selling securities in reliance on Rule 504.
  • If a family trust that is not deemed to be a separate legal entity has two trustees, only one of which resides in a state where a Rule 147 offering is being made, the issuer may still offer and sell securities to the family trust in the Rule 147 offering.

Questions 258.04, 260.02 and 541.02 and Section 259 were removed.

The revised C&DIs are available here.

The SEC’s Division of Economic and Risk Analysis (DERA) recently produced a Report to Congress regarding the impacts of the Dodd-Frank Act on access to capital for consumers, investors, and businesses, and market liquidity.  Although the Report is principally focused on liquidity, it does provide some interesting statistics regarding the primary issuance of equity securities.

The Report notes that total capital formation from 2010 when the Dodd-Frank Act was enacted through year-end 2016 was approximately $20.2 trillion, of which $8.8 trillion was raised through registered offerings, and $11.38 trillion was raised in exempt offerings.  The report notes the substantial increase in reliance on exempt offerings.  Regulation D offerings have more than doubled since 2009.  However, the report notes that the amount sold in reliance on Rule 506(c) represented only 3% of the amount sold in reliance on Rule 506.  The average amounts raised in initial Rule 506(c) offerings is much smaller than the average amount reported sold in  Rule 506(b) offerings.  Rule 144A issuances remain stable.

The Report also provides data regarding Regulation A and crowdfunded offerings, and may be accessed here:  https://www.sec.gov/files/access-to-capital-and-market-liquidity-study-dera-2017.pdf.

MoFo is rolling out the classics—MoFo Classics Series, that is. These two CLE sessions will focus on developments in the private placement market. Mark your calendar for these in-person only sessions, held at our New York office from 8:30 a.m. to 9:30 a.m.

Private Placement Market Developments – Thursday, September 14, 2017
Morrison & Foerster LLP
250 West 55th Street
New York, NY 10019

During this session, we will discuss developments affecting private placements, including:

  • Increased reliance on Section 4(a)(2) instead of the Rule 506 safe harbor;
  • Addressing no registration opinions;
  • Bad actor diligence for issuers and placement agents;
  • Diligence and the use of “big boy” letters;
  • FINRA Rule 5123 updates;
  • FINRA and SEC enforcement developments affecting private placements; and
  • Nasdaq’s 20% rule.

Late Stage Private Placements – Tuesday, September 19, 2017
Morrison & Foerster LLP
250 West 55th Street
New York, NY 10019

Successful privately held companies considering their liquidity opportunities or eyeing an IPO often turn to late stage private placements. Late stage private placements with institutional investors, cross-over investors and strategic investors raise a number of considerations distinct from those arising in earlier stage and venture financing transactions. During this session, we will discuss:

  • Timing and process for late stage private placements;
  • Terms of late stage private placements;
  • Principal concerns for cross-over funds;
  • Diligence, projections and information sharing;
  • IPO and acquisition ratchets;
  • Governance issues;
  • The placement agent’s role; and
  • Planning for a sale or an IPO.

NY and CA CLE credit is pending for both sessions.

To register, please click here.

On November 17, 2016, the staff of the SEC’s Division of Corporation Finance (the “Staff”) issued four new compliance and disclosure interpretations (“C&DIs”) addressing aspects of offerings under Regulation A and Regulation D.  Highlights of the C&DIs include, among other things, the following guidance:

  • An issuer that seeks to qualify an additional class of securities by a post-qualification amendment to a previously qualified offering statement under Regulation A must satisfy the requirements of Item 4 to Part I of Form 1-A by providing responses that relate only to the additional class of securities.
  • A change of 20% or less in the aggregate offering price, which is permitted under the Note to Rule 253(b) of Regulation A without a post-qualification amendment, may be measured from either the high end (in the case of an increase in the offering price) or the low end (in the case of a decrease in the offering price) of that range.  However, a change of 20% or less is not permitted where the maximum aggregate offering price would result in the offering exceeding the relevant offering limit ($20 million for Tier 1 offerings and $50 million for Tier 2 offerings) or if the change would result in a Tier 1 offering becoming a Tier 2 offering.
  • Consistent with the treatment of EGCs under Section 71003 of the FAST Act, a company filing or confidentially submitting an offering statement under Regulation A may omit financial information for historical periods otherwise required by Part F/S of the Form 1-A, including financial information of other entities required to be included in Part F/S.  However, the company must reasonably believe that the omitted information will not be required to be included in the offering statement at the time of qualification.
  • Offers and sales of securities made in reliance on Rule 506(b) prior to the use of general solicitation in a subsequent Rule 506(c) offering will not be integrated with the offers and sales of securities made in reliance on Rule 506(c).

A copy of the C&DIs is available at: https://media2.mofo.com/documents/161118-question-182-12.pdf