Tag Archives: SEC

SEC Report on Tokens as Securities: Seven Takeaways

One of the more interesting phenomena in early-stage investing is the recent emergence of initial coin offerings (“ICOs”), token generation events (“TGEs”), or similar distributed ledger or blockchain-enabled means for raising capital. Much has been written, including by many skilled lawyers in the technology sector, about whether the tokens issued in these structures involve “securities” – and, frankly, some of it is unhelpful. …

SEC Proposes Clawback Rules

The SEC has proposed rules requiring listed issuers to adopt and comply with written “clawback” policies. These policies would need to provide that, if a listed issuer is required to prepare an accounting restatement due to the material noncompliance of the issuer with any financial reporting requirement under the securities laws, then the issuer will recover the amount of any incentive-based compensation erroneously awarded to an executive officer.…

SEC Proposes “Pay-Versus-Performance” Rules

Yesterday the SEC issued its long-awaited “pay-versus-performance” rule proposal. The rules would add a new paragraph (v) to Item 402 of Regulation S-K. In short, the proposed rules would require a new table comparing “executive compensation actually paid” to the “total shareholder return” (TSR) of the company and its peers, as well as a discussion of the relationship between these amounts.…

Carefully Draft NDAs to Avoid Whistleblower Concerns

In light of the SEC’s first enforcement action against a company for impeding whistleblower activity in violation of Rule 21F-17, employers may wish to consider clarifying in their agreements, policies and practices that involve confidentiality obligations that employees may provide truthful information to the SEC or other governmental agencies concerning potential violations of law.…

IMHO, Omnicare Doesn’t Materially Change Opinion Disclosure

Today, the U.S. Supreme Court issued its anticipated Omnicare decision, which addresses the standard of liability applied to expressions of opinion in a registration statement for a public offering. While there will be clamoring about Omnicare (it is somewhat rare for the Supreme Court to issue securities law decisions), in my opinion the case does not involve a fundamental shift in how disclosure is drafted, although it does invite a few drafting and diligence strategies.…

Recent SEC Interpretations Facilitate Intrastate Crowdfunding

The SEC has recently issued interpretations regarding Rule 147.  This rule provides a safe harbor under Section 3(a)(11) of the Securities Act of 1933, as amended, which exempts from federal registration securities offered and sold only to persons resident within a single state or territory, in which the issuer is also resident. …

Dodd-Frank affects private companies too: practice points to note

Article prepared by and republished courtesy of our colleagues Andrew Weil, Alec Fraser and Bradley Phipps; originally published here: http://www.dlapiper.com/dodd-frank-affects-private-companies-too-practice-points-to-note/.

The Dodd-Frank Act – signed by President Barack Obama more than three years ago, and since then advanced with a host of rules and regulations – has been widely viewed as a law that addresses systemic risk in the financial system and enhances the corporate responsibility of public companies to shareholders.…

SEC Provides Interpretations on Rule 506(c)

As we’ve previously blogged, in July 2013 the SEC adopted rules that permit general solicitation and general advertising in connection with certain offerings of securities to accredited investors.  Yesterday, to help the markets understand some common interpretative questions associated with these new rules, the SEC issued several new Compliance and Disclosure Interpretations. …

Overview of Proposed SEC Crowdfunding Rules

CONTRIBUTED BY Trent Dykes and Nathan Luce

Earlier today, the Securities and Exchange Commission (SEC) took an important step in making securities-based crowdfunding a reality for many small companies with the release of its proposed rules governing crowdfunding. The proposed rules, called “Regulation Crowdfunding,” were drafted in connection with Title III of the JOBS Act.…

Demo Days, Pitch Events and the New Reg D

CONTRIBUTED BY
Trent Dykes, Megan Muir and Kiran Lingam (guest contributor from SeedInvest)

I. Introduction / Background

With the passage of the JOBS Act, the regulation governing most private securities offerings is undergoing a dramatic makeover. Congress tasked the Securities and Exchange Commission (SEC) with developing new rules allowing companies to generally solicit funds, subject to restrictions as determined by the SEC.…

New SEC Rules Disqualifying “Bad Actors” in Private Fundraising

Megan Muir.jpgCONTRIBUTED BY
Megan Muir

Earlier this summer, together with some of my partners within DLA Piper (Christopher Paci, Jason Harmon, Darryl Steinhause and Wesley Nissen), I wrote an article about new SEC regulations concerning private offerings. The final rules issued in July 2013 by the SEC go into effect on September 23, 2013.…

SEC Issues Rules Lifting Ban on General Solicitation in Unregistered Fundraising

Ban on General Solicitation Lifted with Respect to Accredited Investors

Today, the Securities and Exchange Commission (SEC) adopted new rules to lift the ban on general solicitation of funds or general advertising for certain private offerings of securities.  Once the rules become effective (60 days after publication in the Federal Register), provided that certain requirements are met, startups, fund managers and other companies will be able to utilize general advertising to offer to sell stock to “accredited investors” as defined in Rule 501 of Regulation D of the Securities Act of 1933 (typically wealthy individuals with liquid net worth in excess of $1 million or investment funds; see our discussion of the recently revised accredited investor standards here as well as information on the SEC’s site http://www.sec.gov/answers/accred.htm). …

“Venture Capital Fund” Flowchart for Exemption Under the Investment Advisers Act of 1940

This article is appearing simultaneously on The Venture Alley and on Startup Law Blog

The below flowchart may be helpful to you in answering the question whether you qualify for the exemption for “venture capital funds” under Section 203(l) of the Investment Adviser’s Act of 1940 ( the “Advisers Act”), pursuant to the final rules promulgated by the SEC.…

Comment Letter Response to Washington State’s Plans to Regulate More Fund Managers

As readers of this blog know, Washington State is proposing new rules that will require more fund managers to become registered investment advisers.  These rules were originally proposed in the second half of last year and, in response to preliminary comments, the Securities Division of the Washington State Department of Financial Institutions (DFI) proposed new rules for comment by May 21, 2013. …

Exchanges Must Adopt New Compensation Committee Rules

The SEC has adopted final rules directing national securities exchanges to establish listing standards relating to Compensation Committees, pursuant to Section 952 of Dodd-Frank Wall Street Reform and Consumer Protection Act. These new rules require exchanges to adopt heightened independence standards for compensation committee members and rules permitting compensation committees to engage compensation advisers, at the company's expense, after taking into account certain independence factors relating to such compensation advisers.

More Calls to Relax General Solicitation Rules in Private Offerings

A_Ledbetter_LR.jpgCONTRIBUTED BY
Andrew Ledbetter
andrew.ledbetter@dlapiper.com

In addition to legislative initiatives we’ve previously discussed, we continue to see efforts to relax the general solicitation prohibition in private offerings.  For example, the SEC’s Advisory Committee on Small and Emerging Companies recently made a formal recommendation that the SEC take immediate action to permit general solicitation and advertising in private offerings under Rule 506 where the securities are only sold to accredited investors.  In addition, the Managed Funds Association, an organization of investment professionals in hedge funds, funds of funds, and managed futures funds, has used the somewhat uncommon process of submitting a petition for rulemaking to the SEC, asking the SEC to eliminate the ban on general solicitation and advertising for offerings or sales of securities by “private funds.”…

SEC Adopts ‘Net Worth’ Rules for Accredited Investors

A_Ledbetter_LR.jpgCONTRIBUTED BY
Andrew Ledbetter
andrew.ledbetter@dlapiper.com

As expected, the SEC has adopted final rules regarding the exclusion of a person’s primary residence, and related debt securing the residence, from the “net worth” standard for accredited investors.  The final rules are substantially similar to those the SEC previously proposed, which we summarized in this earlier post.…

SEC Announces Formation of Advisory Committee on Small and Emerging Companies

The SEC today announced the formation of the Advisory Committee on Small and Emerging Companies to focus on interests and priorities of small businesses and smaller public companies. 
According to the SEC’s press release, the committee is intended to provide a formal mechanism through which the SEC can receive advice and recommendations specifically related to privately held small businesses and publicly traded companies with less than $250 million in public market capitalization.…

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