Category: JOBS ACT

JOBS ACT: On December 4, 2015, President Obama signed the Fixing American’s Surface Transportation Act (the “FAST Act”) into law, which included many capital markets/securities-related bills. The FAST Act is being dubbed the JOBS Act 2.0 by many industry insiders. The FAST Act has an aggressive rulemaking timetable and some of its provisions became effective immediately upon signing the bill into law on December 4, 2015…

Sep012015

SEC Issues Guidance On General Solicitation And Advertising In Regulation D Offerings

ABA Journal’s 10th Annual Blawg 100

——————————————————————————————————

Effective September, 2013, the SEC adopted final rules eliminating the prohibition against general solicitation and advertising in Rules 506 and 144A offerings as required by Title II of the JOBS Act.  The enactment of new 506(c) resulting in the elimination of the prohibition against general solicitation and advertising in private offerings to accredited investors has been a slow but sure success.  Trailblazers such as realtymogul.com, circleup.com, wefunder.com and seedinvest.com proved that the model can work, and the rest of the capital marketplace has taken notice.  Recently, more established broker-dealers have begun their foray into the 506(c) marketplace with accredited investor-only crowdfunding websites accompanied by marketing and solicitation to draw investors.

The historical Rule 506 was renumbered to Rule 506(b) and issuers have the option of completing offerings under either Rule 506(b) or 506(c).  Rule 506(b) allows offers and sales to an unlimited number of accredited investors and up to 35 unaccredited investors,

Jul282015

Intrastate Crowdfunding Legislation Has Passed in Florida

ABA Journal’s 10th Annual Blawg 100

——————————————————————————————————

Florida Has Passed Intrastate Crowdfunding Legislation

As the country waits for the SEC to publish final Title III crowdfunding rules as required by the JOBS Act, states continue to enact and introduce state-specific crowdfunding legislation.   As of today, it is unclear when the final federal rules will be released and passed into law though SEC Chair Mary Jo White has publicly stated on several occasions that it will be this year.  Upon passage of the final rules, there will be a period of ramping up time in which crowdfunding portals complete the process of registering with the SEC, becoming members of FINRA and completing the necessary steps to ensure that their portal operates in compliance with the final rules.  Federal crowdfunding is coming, but it is a slow process.

Florida is the newest state to pass intrastate crowdfunding legislation.  The new Florida Intrastate Crowdfunding Exemption takes effect October 1, 2015. As

Jun162015

SEC Has Approved A Two-Year Tick Size Pilot Program For Smaller Public Companies

ABA Journal’s 10th Annual Blawg 100

——————————————————————————————————

On May 6, 2015 the SEC approved a two-year pilot program with FINRA and the national securities exchanges that will widen the minimum quoting and trading increments, commonly referred to as tick sizes, for the stocks of smaller public companies.  The goal of the program is to study whether wider tick sizes improve the market quality and trading of these stocks. 

The basic premise is that if a tick size is wider, the spread will be bigger, and thus market makers and underwriters will have the ability to earn a larger profit on trading.  If market makers and underwriters can earn larger profits on trading, they will have incentive to make markets, support liquidity and issue research on smaller public companies.  The other side of the coin is that larger spreads and more profit for the traders equates to increased costs to the investors whose accounts are being traded. 

The tick size program

Apr142015

SEC Congressional Testimony- Part I

ABA Journal’s 10th Annual Blawg 100

——————————————————————————————————

On three occasions recently representatives of the SEC have given testimony to Congress.  On March 24, 2015, SEC Chair Mary Jo White testified on “Examining the SEC’s Agenda, Operations and FY 2016 Budget Request”; on March 19, 2015, Andrew Ceresny, Director of the SEC Division of Enforcement, testified to Congress on the “Oversight of the SEC’s Division of Enforcement”; and on March 10, 2015, Stephen Luparello, Director of the Division of Trading and Markets, testified on “Venture Exchanges and Small-Cap Companies.”  In a series of blogs, I will summarize the three testimonies.  This first blog in the series summarizes the testimony of Mary Jo White.

Mary Jo White Testimony

On March 24, 2015, SEC Chair Mary Jo White gave testimony before the United States House of Representatives Committee on Financial Services.  The testimony was titled “Examining the SEC’s Agenda, Operations and FY 2016 Budget Request.”  As can be gleaned from the title, Mary

Jan062015

SEC Issues Several Proposed Rule Changes Pertaining To JOBs Act

ABA Journal’s 10th Annual Blawg 100

——————————————————————————————————

On December 18, 2014, the SEC published proposed rule amendments to implement portions of Title V and Title VI of the JOBS Act by amending rules promulgated under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”).  The proposed amendments will revise the Section 12(g) rules to reflect the new, higher shareholder thresholds for triggering registration requirements and for allowing the voluntary termination of registration or suspension of reporting obligations.  The proposed rules also make similar changes related to banks, bank holding companies, and savings and loan companies. 

The proposed rules establish the time for determining accredited status for purposes of calculating shareholders of record and the corresponding application of the registration and deregistration rules.  In particular, the proposed rules set the last day of the fiscal year as the relevant calculation moment effectively imposing an obligation on issuers to obtain, and investors to give, updated representations following an initial

Dec302014

First Issuer Completes NASAA Coordinated Review For Regulation A Offering

 ABA Journal’s 10th Annual Blawg 100

——————————————————————————————————

The first issuer has completed the NASAA coordinated review process to qualify to sell securities in multiple states under Regulation A.  As the first and only issuer to complete this process, the issuer (Groundfloor Finance, Inc.) took the time to write a comment letter to the SEC with respect to its Regulation A+ rulemaking and in particular to discuss its experience with the NASAA coordinated review process.  The issuer’s comment letter was followed by a letter to SEC Chair Mary Jo White from the House Financial Services Committee requesting that the SEC study the NASAA Coordinated Review Program.

 The Coordinated Review Process 

The NASAA coordinated review process is well put together and seems to have a focus on both investor protection and supportive assistance for the issuer.  An issuer elects to complete the coordinated review process by completing a Form CR-3b and submitting the application together with a copy of the completed Form

Dec022014

Private Offering Rule Changes Since JOBS Act

ABA Journal’s 10th Annual Blawg 100

——————————————————————————————————

As the end of 2014 approaches, I find myself reflecting on the significant successes and failures in the private offering arena since the enactment of the Jumpstart our Business Startups Act (“JOBS Act”) on April 5, 2012.  Some provisions under the JOBS Act became law without further rule-making action on the part of the SEC; others took time to pass; and significantly, Title III Crowdfunding, the most anticipated change in capital market access, has completely stalled.  This blog is a summary of the in-depth detailed blogs I’ve previously written on each of these topics with some added commentary.

506(c) – The Elimination of the Prohibition Against General Solicitation and Advertising in Private Offerings to Accredited Investors; Broker-Dealer Exemption for 506(c) Funding Websites

The enactment of new 506(c) resulting in the elimination of the prohibition against general solicitation and advertising in private offerings to accredited investors has been a slow but sure success.  Trailblazers

Oct212014

SEC Issues Advertising Guidance Related to State-Specific Crowdfunding

ABA Journal’s 10th Annual Blawg 100

——————————————————————————————————

As required by Title III of the JOBS Act, on October 23, 2013, the SEC published proposed crowdfunding rules.  The SEC has dubbed the new rules “Regulation Crowdfunding.” The entire 584-page text of the rule release is available on the SEC website.  As of today, it is unclear when final rules will be released and passed into law and what changes those final rules will have from the proposed rules.  Moreover, upon passage of the final rules, there will be a period of ramping-up time in which crowdfunding portals complete the process of registering with the SEC, becoming members of FINRA and completing the necessary steps to ensure that their portal operates in compliance with those final rules.  Federal crowdfunding is coming, but it is a slow process.

In the meantime, several states have either enacted or introduced state-specific crowdfunding legislation.

Federal Authority for State Crowdfunding Legislation

Both the federal government

Aug192014

NASAA and US Senate Oppose State Law Pre-Emption in Proposed Regulation A+

On December 18, 2013, the SEC published proposed rules to implement Title IV of the JOBS Act, commonly referred to as Regulation A+.  Since that time there has been very little activity towards the advancement of a final rule.  The comment period closed March 24, 2014, and presumably the SEC is analyzing the information and deciding on the next reiteration.

NASAA

The North American Securities Administrators Association (NASAA), a group whose members are comprised of state securities regulators, while supportive of the Regulation A+ concept as a whole, has been vocal of its opposition of the proposed state law pre-emption provisions.

Notably, on April 8, 2014, Commissioner Luis A. Aguilar, the NASAA liaison, gave a speech at the North American Securities Administrators Association commenting on the NASAA’s position.  In the speech Mr. Aguilar praised the concept of the rule itself, including the two-tier structure, offering amount limits and importantly ongoing reporting requirements.  He expressed agreement with many of the same

Aug122014

Corporate Communications During the Public Offering Process; Avoid Gun Jumping

The public offering process is divided into three periods: (1) the quiet or pre-filing period, (2) the waiting or pre-effective period, and (3) the post-effective period.  Communications made by the company during any of these three periods may, depending on the mode and content, result in violations of Section 5 of the Securities Act of 1933 (the “Securities Act”).  Communication related violations of Section 5 are often referred to as “gun jumping.”  All forms of communication could create “gun jumping” issues (e.g., press releases, interviews, and use of social media).  “Gun jumping” refers to written or oral offers of securities made before the filing of the registration statement and written offers made after the filing of the registration statement other than by means of a prospectus that meet the requirements of Section 10 of the Securities Act, a free writing prospectus or a communication falling within one of the several safe harbors from the gun-jumping provisions.

Section 5(a) of