By Lauren Mack Companies seeking to raise capital – whether through selling equity, convertible notes, or any other security – in the United States must navigate a complex landscape of securities laws and regulations. They are subject not only to federal regulations, but also the laws of each state in which an investor (or soon-to-be investor) resides. The general rule under federal law is that …
SEC Issues New Guidance on General Solicitation and Advertising in Regulation D Offerings
By Lauren Mack On August 6, 2015, the SEC’s Division of Corporation Finance (“DCF”) updated its Compliance and Disclosure Interpretations (“CDI”) with eleven new CDI on general solicitation and advertising in Regulation D offerings. That same day, the DCF also issued a no-action letter finding that an online venture capital firm’s procedures for creating online pre-existing substantial relationships did not constitute general solicitation and advertising …
The “Bad Actor” Amendments: Private Issuer Compliance with Rule 506
By Simon Riveles and Peter Tyson On July 10, 2013, the Securities and Exchange Commission (SEC) adopted amendments to Rule 506 of the Securities Act of 1933 to disqualify securities offerings relying on the Rule 506 exemption that involve certain “felons and other ‘bad actors’”. The final amendments (the Final Rules) went into effect on September 23, 2013 (the Effective Date) and apply to all …
SEC Proposes Amendments to Rule 156 following repeal of the ban on General Solicitation under Rule 506
By Peter Tyson and Simon Riveles Following the SEC’s adoption of amended Rule 506, the SEC has proposed amendments to Rule 156 of the Securities Act of 1933 to extend the rule’s interpretive guidance on sales literature to private funds. The proposed amendments to Rule 156 reflect the SEC’s concerns regarding fraudulent and misleading sales literature, the incidence of which could increase given the adoption …
SEC Repeals the Ban on General Solicitation under Rule 506
On July 10, 2013, the Securities and Exchange Commission (the “Commission”) adopted amendments to Rule 506 of Regulation D (“Rule 506(c)”) implementing changes mandating by the Jumpstart Our Business Startups Act (“JOBS Act”). Rule 506(c) permits an issuer to engage in general solicitation or general advertising[1] in offering and selling of securities under Rule 506 provided such issuer reasonably believes and takes “reasonable steps” to …
FINRA Rule 5123 Becomes Effective December 3, 2012
On September 5, 2012, FINRA issued a regulatory notice informing its members that Rule 5123, approved by the SEC in June, will become effective December 3, 2012. The rule requires that FINRA registered broker-dealers provide a notice filing to FINRA within 15 days of making a private placement of securities to certain classes of investors. The notice filing will consist of the private placement memorandum …