Regulation D Offerings

The SEC’S Spring 2024 Flex Regulatory Agenda

On July 9, 2024, the SEC published its semi-annual Spring 2024 regulatory agenda (“Agenda”) and plans for rulemaking. The Agenda is published twice a year, and for several years I have blogged about each publication. Although items on the Agenda can move from one category to the next, be dropped off altogether, or new items pop up in any of the categories (including the final rule stage), the Agenda provides valuable insight into the SEC’s plans and the influence that comments can make on the rulemaking process.

The Agenda is broken down by (i) Proposed Rule Stage; (ii) Final Rule Stage; and (iii) Long-term Actions. The Proposed and Final Rule Stages are intended to be completed within the next 12 months and Long-term Actions are anything beyond that. The number of items to be completed in a 12-month time frame is 34, down from 43 on the Fall 2023 Agenda and a whopping 55 on the Spring 2023 Agenda. Many

August 13, 2024

Free Writing Prospectus

I’m finding a lot of good segues recently – flowing from my discussion on the definition and implications of shell company status in a reverse merger (see HERE) is the topic of a free writing prospectus (“FWP”). In particular, what is a free writing prospectus, when and how is it used, and what companies are eligible for its use.

Communications during a registered offering are strictly regulated, including communications before the filing of a registration statement, after filing and before effectiveness, and after effectiveness – for more on communications during the offering process see HERE. An FWP is a written communication other than the prospectus filed with the SEC, used to make offers, or to market an offering.

An FWP is one of the few writings, beyond the prospectus itself, that may be used to market an offering. However, its use is limited to eligible companies, or in securities law parlance – those that are not ineligible. Accordingly,

July 23, 2024

2022 Annual Report Of The Office Of The Advocate For Small Business Capital Formation

The Office of the Advocate for Small Business Capital Formation (“Office”) has published its Annual Report for fiscal year 2022 (“Report”). The Report is delivered to the Committee on Banking, Housing, and Urban Affairs of the U.S. Senate and the Committee on Financial Services of the U.S. House of Representatives directly by the Office, without review or input from the SEC at large.

Background

The SEC’s Office of the Advocate for Small Business Capital Formation launched in January 2019 after being created by Congress pursuant to the Small Business Advocate Act of 2016 (see HERE). The mission of the Office is to advocate for pragmatic solutions to accessing capital markets and business growth.

The Office has the following functions: (i) assist small businesses (privately held or public with a market cap of less than $250 million) and their investors in resolving problems with the SEC or self-regulatory organizations; (ii) identify and propose regulatory changes that would benefit small businesses

January 17, 2023

SEC Fall 2021 Regulatory Agenda

In mid-December, the SEC published its semiannual regulatory agenda and plans for rulemaking. The Unified Agenda of Regulatory and Deregulatory Actions contains the Regulatory Plans of 28 federal agencies and 68 federal agency regulatory agendas. The Fall 2021 Agenda (“Agenda”) met with criticism from Commissioner Hester M. Peirce and now former Commissioner Elad L. Roisman as failing to provide any items intended to facilitate capital formation – one of the main tenets of the SEC. The Agenda is published twice a year, and for several years I have blogged about each publication.

The Agenda is broken down by (i) “Pre-rule Stage”; (ii) Proposed Rule Stage; (iii) Final Rule Stage; and (iv) Long-term Actions. The Proposed and Final Rule Stages are intended to be completed within the next 12 months and Long-term Actions are anything beyond that. The number of items to be completed in a 12-month time frame jumped up to 52 items since Spring, which had only 45

February 15, 2022

Consequences Of Failing To File A Form D

I often get calls from clients or potential clients that have engaged in exempt offerings, have not filed a Form D and are wondering what the consequences might be. Taking it further, what are the consequences of not complying with the minor state blue sky requirements for any federally covered securities?

Form D – In General

A Form D is a brief fill-in-the-blank form that is filed with the SEC in connection with an offering or issuance of securities in reliance on the exemptions from the Securities Act of 1933 (“Securities Act”) registration requirements found in Regulation D. The offering exemptions in Regulation D consist of Rules 504, 506(b) and 506(c) (see HERE).

A Form D is a notice filing. Rule 503 of Regulation D, which was last amended in November 2016, requires that a company relying on Rules 504 or 506 must file a Form D, notice of sales, with the SEC for each new offering

September 21, 2021

SEC Final Rule Changes For Exempt Offerings – Part 5

On November 2, 2020, the SEC adopted final rule changes to harmonize, simplify and improve the exempt offering framework. The new rules go into effect on March 14, 2021. The 388-page rule release provides a comprehensive overhaul to the exempt offering and integration rules worthy of in-depth discussion. As such, like the proposed rules, I am breaking it down over a series of blogs with this final blog discussing the changes to Regulation Crowdfunding. The first blog in the series discussed the new integration rules (see HERE). The second blog in the series covered offering communications (see HERE). The third blog focuses on amendments to Rule 504, Rule 506(b) and 506(c) of Regulation D (see HERE). The fourth blog in the series reviews the changes to Regulation A (see HERE).

Current Exemption Framework

The Securities Act of 1933 (“Securities Act”) requires that every offer and sale of securities either be registered with the SEC or exempt

March 9, 2021

SEC Final Rule Changes For Exempt Offerings – Part 4

On November 2, 2020, the SEC adopted final rule changes to harmonize, simplify and improve the exempt offering framework. The new rules go into effect on March 14, 2021. The 388-page rule release provides a comprehensive overhaul to the exempt offering and integration rules worthy of in-depth discussion. As such, like the proposed rules, I am breaking it down over a series of blogs with this fourth blog discussing the changes to Regulation A. The first blog in the series discussed the new integration rules (see HERE). The second blog in the series covered offering communications (see HERE). The third blog focuses on amendments to Rule 504, Rule 506(b) and 506(c) of Regulation D (see HERE.

Background; Current Exemption Framework

The Securities Act of 1933 (“Securities Act”) requires that every offer and sale of securities either be registered with the SEC or exempt from registration. Offering exemptions are found in Sections 3 and 4 of the

February 23, 2021

SEC Final Rule Changes For Exempt Offerings – Part 3

On November 2, 2020, the SEC adopted final rule changes to harmonize, simplify and improve the exempt offering framework. The new rules go into effect on March 14, 2021. The 388-page rule release provides a comprehensive overhaul to the exempt offering and integration rules worthy of in-depth discussion. As such, like the proposed rules, I am breaking it down over a series of blogs with this second blog discussing offering communications including new rules related to demo days and generic testing the waters. The first blog in the series discussed the new integration rules (see HERE). The second blog in the series covered offering communications (see HERE). This third blog focuses on amendments to Rule 504, Rule 506(b) and 506(c) of Regulation D.

Background

The Securities Act of 1933 (“Securities Act”) requires that every offer and sale of securities either be registered with the SEC or exempt from registration. The purpose of registration is to provide investors

February 16, 2021

NYSE Continues To Struggle With Direct Listing Rule Changes

Late last year, around the same time that the SEC approved Nasdaq rule changes related to direct listings on the Nasdaq Global Market and Nasdaq Capital Market (see HERE), the SEC rejected proposed amendments by the NYSE big board which would allow a company to issue new shares and directly raise capital in conjunction with a direct listing process. Nasdaq had previously updated its direct listing rules for listing on the Market Global Select Market (see HERE).

The NYSE did not give up and in August of this year, after two more proposed amendments, the SEC finally approved new NYSE direct listing rules that allow companies to sell newly issued primary shares on its own behalf into the opening trade in a direct listing process. However, after receiving a notice of intent to petition to prevent the rule change, the SEC has stayed the approval until further notice. Still pushing forward, on September 4, the NYSE filed

September 15, 2020

SEC Proposed Rule Changes For Exempt Offerings – Part 5

On March 4, 2020, the SEC published proposed rule changes to harmonize, simplify and improve the exempt offering framework. The SEC had originally issued a concept release and request for public comment on the subject in June 2019 (see HERE). The proposed rule changes indicate that the SEC has been listening to capital markets participants and is supporting increased access to private offerings for both businesses and a larger class of investors. Together with the proposed amendments to the accredited investor definition (see HERE), the new rules could have as much of an impact on the capital markets as the JOBS Act has had since its enactment in 2012.

The 341-page rule release provides a comprehensive overhaul to the exempt offering and integration rules worthy of in-depth discussion. I have been breaking the information down into a series of blogs, with this fifth and final blog focusing on amendments to Regulation Crowdfunding.

To review the first blog

June 23, 2020

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Regulation D Offerings

Free Writing Prospectus

2022 Annual Report Of The Office Of The Advocate For Small Business Capital Formation

SEC Fall 2021 Regulatory Agenda

Consequences Of Failing To File A Form D

SEC Final Rule Changes For Exempt Offerings – Part 5

SEC Final Rule Changes For Exempt Offerings – Part 4

SEC Final Rule Changes For Exempt Offerings – Part 3

SEC Proposed Rule Changes For Exempt Offerings – Part 5

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