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ナスダック、SECによる取引停止後の企業を上場廃止とする新たな権限を提案

2026年3月3日、ナスダックは、SECによる取引停止後に企業を上場廃止とする権限を同取引所に付与する規則変更案をSECに提出した。本提案は、ナスダックがここ数年にわたり進めてきた、小規模な上場企業に対する監督強化と、ナスダックの判断では基本的な存続可能性を満たさなくなった企業をより迅速に市場から除外するための取り組みの一環である。

これまでの動きを踏まえると、ナスダックによる最近の取り組みには以下が含まれる：(i) ナスダック・グローバル・マーケットおよびナスダック・キャピタル・マーケットのすべての企業に対し、上場証券の最低時価総額を500万ドル以上に維持することを求める新たな継続上場要件を導入するための改正案（参照); (ii) アドバイザーを含む企業に関連する外部第三者の行為等を踏まえ、上場を拒否するナスダックの裁量権を付与する改正（参照); (iii) 中国関連企業に対する最低上場基準を引き上げるための改正（参照) ; (iv) 最低買気配値（bid価格）、浮動株の時価総額、純資産、利益、および総資産／売上高要件などの数値基準のいずれかを下回り、かつ上場証券の時価総額（MVLS）が500万ドル未満となった企業について、売買停止および上場廃止を迅速化するための改正（参照); (v) ナスダック・キャピタル・マーケットおよびナスダック・グローバル・マーケットの流動性上場基準を改正し、純利益基準で上場する企業に対する最低自由流通株式時価総額（MVUPHS）の要件を500万ドルから1,500万ドルへ引き上げる改正（参照); (vi) 0.10ドル株の上場廃止を迅速化するための改正（参照); (vii) MVUPHSはIPOによる調達資金によってのみ満たされるものとし、再売出しのために登録された株式は算入しないとする改正（参照); (viii) 2回目の是正期間後も最低買気配値要件を回復できない企業や、過去1年間に株式併合を実施した銘柄について、上場廃止プロセスを迅速化する改正（参照); (ix)株式併合により最低価格要件を満たした場合であっても、単元株主数や浮動株要件など他のナスダック上場基準に適合しない場合には当該手法の利用を制限するための規則変更（参照)。

背景

ナスダックは、新たにIM-5101-4を採用することを提案しており、これによりSECが過去に取引停止措置を講じた証券について、ナスダックが適切かつ公共の利益に資すると判断した場合に、当該証券を上場廃止とする権限を付与することとなる。

参考として、ナスダック上場規則5101は、多数の個別上場規則の総則的な前文規定であり、証券の初回上場および継続上場に関してナスダックに広範な裁量権を付与している。この裁量権は、市場の品質および市場に対する公衆の信頼を維持し、不正および不公正な取引慣行を防止し、公正かつ衡平な取引原則を促進し、投資家および公共の利益を保護することを目的としている。同規則5101は具体的に、「ナスダックは、初回上場の拒否、特定証券の初回または継続上場に関して追加的またはより厳格な基準の適用、あるいはナスダックの判断において、たとえ当該証券がすべての列挙された上場要件を満たしていたとしても、特定の事象、状況、または事情に基づき、当該証券の初回または継続上場が不適切または正当化されないと判断される場合には、その上場を停止または廃止することができる」と規定している。

IM-5101-1は、本規則が適用され得る状況について、限定列挙ではない形でその内容を補足的に定めている。全体として、IM-5101-1は当該規則の適用が想定される主な4つの状況を示している：(i) 規制違反の経歴を有する個人が当該企業に関与している場合；(ii) 企業が連邦倒産法またはこれに相当する外国法に基づく保護手続を申請した場合；(iii) 監査対象となる財務諸表について、独立監査人が意見不表明（ディスクレーマー・オピニオン）を表明した場合、または財務諸表に必要な認証が含まれていない場合；(iv) 当該企業がコーポレート・ガバナンス違反の履歴を有する場合。

2025年12月、ナスダックはIM-5101-3を追加し、規則5101に基づき、当該証券が操作の影響を受けやすいと判断される要素に基づいて初回上場を拒否する権限をナスダックに付与した。これは、ナスダックおよび他の規制当局がこれまでに特定してきた、類似の状況にある既上場企業に関する懸念、または当該企業のアドバイザー（監査法人、引受人、法律事務所、ブローカー、清算機関その他の専門サービス提供者を含む）に関連する事情に基づくものであり、申請企業がすべての所定の上場要件を満たしている場合であっても適用され得る。IM-5101-3は、上場申請に関連してナスダックが考慮し得る要素について、限定列挙ではない形でその一部を示している。

当該企業が所在する国・地域（当該法域における米国株主のための法的救済手段の利用可能性、企業に対する規制執行を試みる当局にとって障害となり得るブロッキング法令、データ保護法その他の法制度の存在、当該法域における規制当局が企業に対してルールを執行する際の困難性、および当該法域における規制当局の透明性を含む）；
ある個人または法人が当該企業に対して実質的な影響力を有するか否か、また有する場合には当該者の所在国・地域（当該法域における米国株主のための法的救済手段の利用可能性、および上記(i)に列挙した外国法域に関するその他すべての要素を含む）；
引受人、ブローカーおよび清算機関による割当およびそれらの過去の取引実績の検討を踏まえたIPO時および上場後の想定浮動株および株式分布の広がりが、十分な流動性および持株の集中リスクに関する懸念を生じさせるか否か；
監査法人、引受人、法律事務所、ブローカー、清算機関その他の専門サービス提供者を含む当該企業のアドバイザーに関する問題の有無（当該アドバイザーが関連規制当局による審査を受けているか否か、また受けている場合にはその結果を含むがこれらに限られない要素に基づく）；
当該企業のアドバイザーが新規設立の法人である場合において、そのアドバイザーの主要関係者が、規制上の履歴を有する他の事務所に関与していたか否か；
当該企業のアドバイザーが、過去の取引において、当該証券が懸念のある取引動向またはボラティリティの高い取引パターンの対象となった事例に関与していたか否か；
当該企業の経営陣および取締役会が、ナスダック規則および連邦証券法に基づく規制・報告義務を含む、米国上場企業としての要件についての経験または理解を有しているか否か；
当該企業またはそのアドバイザーに関連するFINRA、SECその他の規制当局への照会または通報の有無（これらは当該案件の記録に含めることができ、該当する場合にはその結果を含む）；
会社が現在、または最近、継続企業の前提に関する監査意見を受けているかどうか、また、もし受けている場合、会社が継続企業として存続するための計画は何か；
その他、当該企業の取締役会、経営陣、主要株主またはアドバイザーの健全性・信頼性に関して懸念を生じさせるその他の要因の有無。

ナスダックの提案：新IM-5101-4

前述のとおり、ナスダックは新たな規則IM-5101-4の採択を提案しています。この規則により、ナスダックは、SECが既に取引を停止している証券について、ナスダックが適切かつ公共の利益にかなうと判断した場合、上場廃止を行う権限を持つことになります。この規則案は対象を絞り込んでおり、証券取引法第12条(k)項に基づきSECから取引停止命令を受けた企業のみに適用されます。従来、SECによる取引停止命令（通常10営業日）は、正確な情報の開示を促したり、情報開示の不足に対処したりするための一時的な措置として用いられてきました。このような取引停止命令は、ナスダックによる行政上の「一時停止」または取引停止措置につながることが多いものの、これまで上場廃止の自動的または迅速な引き金とはなっていませんでした。

ナスダックの新たな提案は、SECによる取引停止命令の期限切れ後直ちに上場廃止手続きを開始できることを明示的に認めることで、このギャップを埋めることを目指しています。この提案の核心は、ナスダックが個々のケースごとに裁量権を行使し、証券が操作されやすいかどうか、あるいはSECの措置に至った状況が、情報開示だけでは解消できない投資家への継続的なリスクを生み出しているかどうかを判断するという点にある。

ナスダックは、上場停止後の企業を上場廃止すべきかどうかを判断するにあたり、最近IM-5101-3で明文化された、上記に挙げた定性的な要素の「リスト」を用いる予定である。IM-5101-3と同様に、ナスダックは、問題が当該企業と無関係の第三者によって引き起こされた場合であっても、上場廃止の権限を行使する可能性がある。

上場廃止通知および審査

提案されている規則では、ナスダックが企業の上場廃止を求める場合、上場廃止決定が下され、異議申し立てがない限り、その企業は直ちに取引停止と上場廃止の対象となります。その後、企業は決定に対して異議申し立てを行うことができます。ナスダックの上場不備と上場廃止プロセスに関する私の3部構成のブログについては、（参照) ; （参照) ; (および)。

パートナー・アドバイザリー

ナスダックが市場の健全性を重視していることから、「情報開示のみ」はもはや万能薬ではなくなりました。ナスダック上場企業は、これまで以上に、関係する相手だけでなく、株式の取引活動や異常事態にも細心の注意を払う必要があります。具体的には、以下の点に留意すべきです。

規制当局の監視を予測する：株価の異常な変動や取引量の急増が見られた場合、SEC（米国証券取引委員会）の調査を待つのではなく、透明性のある、根拠に基づいたコミュニケーションを通じて、これらの問題に積極的に対処する必要があります。
関係企業の精査：規則5101の要素を踏まえ、取締役会は、主要株主や企業と関係のある可能性のある「コンサルタント」の経歴を、これまで以上に綿密に精査する必要があります。
立証責任：取引停止後に上場廃止通知が発行された場合、ナスダックが定める基準に基づき、当該証券が操作されにくいことを証明する責任は、事実上、発行企業に移ります。

著者

ローラ・アンソニー弁護士

設立パートナー

アンソニー、リンダー＆カコマノリス

企業法務および証券法務事務所

LAnthony@ALClaw.com

証券弁護士ローラ・アンソニー氏とその経験豊富な法律チームは、中小規模の非公開企業、上場企業、そして上場予定の非公開企業に対して継続的な企業顧問サービスを提供しています。ナスダック、NYSEアメリカン、または店頭市場（例えばOTCQBやOTCQX）で上場を目指す企業も対象です。20年以上にわたり、Anthony, Linder & Cacomanolis, PLLC（ALC）は、迅速でパーソナライズされた最先端の法的サービスをクライアントに提供してきました。当事務所の評判と人脈は、投資銀行、証券会社、機関投資家、その他の戦略的提携先への紹介など、クライアントにとって非常に貴重なリソースとなっています。当事務所の専門分野には、1933年証券法の募集・販売および登録要件の遵守（レギュレーションDおよびレギュレーションSに基づく私募取引、PIPE取引、証券トークン・オファリング、イニシャル・コイン・オファリングを含む）が含まれますが、これに限定されません。規制A/A+オファリング、S-1、S-3、S-8フォームの登録申請、S-4フォームによる合併登録、1934年証券取引法の遵守（フォーム10による登録、フォーム10-Q、10-K、8-Kおよび14C情報・14A委任状報告書）、あらゆる形態の株式公開取引、合併・買収（リバースマージャーおよびフォワードマージャーを含む）、ナスダックやNYSEアメリカンを含む証券取引所のコーポレートガバナンス要件への申請および遵守、一般企業取引、一般契約および事業取引が含まれます。アンソニー氏と当事務所は、合併・買収取引において、買収対象企業と買収企業の双方を代理し、合併契約、株式交換契約、株式購入契約、資産購入契約、組織再編契約などの取引文書を作成します。ALC法務チームは、公開企業が連邦および州の証券法やSROs要件に準拠することを支援しており、15c2-11申請、社名変更、リバース・フォワードスプリット、本拠地変更などにも対応しています。アンソニー氏はまた、中堅・中小企業向けの業界ニュースのトップ情報源であるSecuritiesLawBlog.comの著者であり、企業財務に特化したポッドキャスト『LawCast.com: Corporate Finance in Focus』のプロデューサー兼ホストでもあります。当事務所は、ニューヨーク、ロサンゼルス、マイアミ、ボカラトン、ウェストパームビーチ、アトランタ、フェニックス、スコッツデール、シャーロット、シンシナティ、クリーブランド、ワシントンD.C.、デンバー、タンパ、デトロイト、ダラスなど、多くの主要都市でクライアントを代理しています。

アンソニー氏は、Crowdfunding Professional Association（CfPA）、パームビーチ郡弁護士会、フロリダ州弁護士会、アメリカ弁護士会（ABA）および連邦証券規制やプライベート・エクイティ・ベンチャーキャピタルに関するABA委員会など、さまざまな専門団体のメンバーです。パームビーチ郡およびマーティン郡のアメリカ赤十字社、スーザン・コーメン財団、オポチュニティ社（Opportunity, Inc.）、ニュー・ホープ・チャリティーズ、フォー・アーツ協会（Society of the Four Arts）、ノートン美術館、パームビーチ郡動物園協会、クラヴィス・パフォーミング・アーツ・センターなど、複数の地域社会慈善団体を支援しています。

アンソニー氏はフロリダ州立大学ロースクールを優秀な成績で卒業しており、1993年から弁護士として活動しています。

Anthony, Linder & Cacomanolis, PLLC にお問い合わせください。技術的な内容に関するご質問もいつでも歓迎いたします。

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On March 3, 2026, Nasdaq filed a proposed rule change with the SEC that would grant the Exchange the authority to de-list a company following an SEC trading suspension. This proposal is part of a steady and deliberate shift Nasdaq has been making over the past several years to tighten its oversight of smaller public companies and to more quickly remove companies from the market that, in Nasdaq’s view, no longer meet baseline viability.

Updating my running tally, other recent Nasdaq initiatives include: (i) proposed amendments that would impose a new continued listing requirement requiring all Nasdaq Global Market and Nasdaq Capital Market companies to maintain a minimum Market Value of Listed Securities of at least $5 million (see HERE); (ii) an amendment to grant Nasdaq discretionary authority to deny listings based on activity by outside third parties associated with a company including advisors (see HERE); (iii) amendments to increase minimum listing standards for China based companies

Strategy, Inc.（旧MicroStrategy, Inc.）、Metaplanet, Inc.、MARA Holdings, Inc.などの目覚ましい成功を受け、上場企業における新たなモデル、すなわち「DatCo」が登場しました。DatCoとは、従来のように確立された収益基盤を持つ事業ではなく、データ、テクノロジープラットフォーム、分析、あるいは独自情報に主たる価値提案を置く企業を指す略称です。DatCoは一般に、暗号資産の売買・保有・取引を行います。

DatCoという名称自体は新しいものの、これらの取引に伴って生じる規制上の論点は目新しいものではありません。実際、多くのDatCoの設立は、NasdaqおよびNYSE Americanの株主承認規則に直接関わる、従来から見られる手法に沿って進められています。発行体がこれらの規則を回避しようとするケースも見られますが、規制当局による監視は一段と強化されています。

DatCoの一般的な設立方法

多くのDatCoは、既存の上場企業、多くの場合マイクロキャップ企業や本来の事業が停滞している企業がデータ主導型のビジネスモデルへと転換する際に設立されます。この転換は、通常、以下の要素の組み合わせによって実現されます。

1名または複数の大株主による支配持分の二次売却（新たな支配株主グループへの譲渡）
経営陣および取締役会構成の変更
PIPEや私募増資として組成されることが多い大規模なエクイティ投資
データまたはテクノロジープラットフォームの取得、または社内での構築

IPOや通常のリバース・マージャー／de-SPAC取引が比較的単純な取引であるのに対し、過半数持分の二次取得はそう簡単ではありません。この構造では、一般に1名または複数の大株主が新たな支配株主グループに株式を売却しますが、一定期間既存事業を維持します。その後、会社は市場価格で設定された1件以上のPIPE取引を行い、新しい資金をすべて新たなDatCoビジネスモデルに充当することで、株主承認要件の発動を回避します。会社は法的には同一の発行体として残る場合もありますが、経済的な現実としては、新しい支配権と新しい資本を伴う新規事業となることが多いのです。

ナスダックおよびNYSEの株主承認要件

DatCoにとって最も重要で、かつしばしば過小評価されがちな規制上のハードルのひとつが、ナスダックおよびNYSEの株主承認要件への適合です。DatCoはしばしば時価総額が小さく、公開株式数が限られており、成長資金や事業取得のために株式を発行する必要があるため、これらの規則が想定以上に頻繁に適用されます。PIPE取引が、新しい取締役の就任、現物出資、二次株主取引、暗号資産中心のビジネスモデル開始などの他の変更と近接して行われる場合、取引所はより包括的な判断を行い、株主承認を求めることがあります。

20％ルール

ナスダックとNYSEアメリカンは、上場企業が規則で定められた最低価格を下回る価格で公募以外の取引において発行済証券の20％以上を発行する前に、株主承認を得ることを義務付けています（を参照）。多くのDatCo、あるいは設立途中のDatCoは、20％ルールを回避する形でPIPE取引を構成していますが、取引所は取引全体をより厳密に精査しています。

支配権変更取引

ナスダックおよびNYSEは、株式の発行または発行の可能性によって会社の支配権が変更される場合にも、株主承認を事前に取得することを求めています（を参照）。支配権変更ルールは、株式の発行に起因する場合にのみ適用されるため、新しい取締役の就任や支配株式の私的売却など、株式の発行を伴わない支配権変更の場合は、株主承認は必要ありません。しかしながら、取引所は、形式上株主承認要件を回避しているものの、DatCoの設立を示唆する他の取引と近接して行われる支配権変更取引についても厳格に監視しています。

株式を用いた取得

ナスダックとNYSEは、他社の株式または資産の取得に関連して証券を発行する前に、次の場合に株主承認を必要とします（を参照）：(1) 現金による公募以外の普通株式（アーンアウト条項または類似の条項に基づき発行される株式を含む）または普通株式に転換・行使可能な証券の現在または将来の発行により、発行時に議決権が発行前の20％以上になる、または発行される普通株式の株数が発行前の発行済普通株式総数の20％以上になる場合、または (2) 会社の取締役、役員、または主要株主が直接または間接的に、取得対象会社や資産、または取引・一連の関連取引で支払われる対価に対して5％以上（複数の場合は合計10％以上）の利害関係を有し、普通株式または普通株式に転換・行使可能な証券の現在または将来の発行により、発行済普通株式数または議決権が5％以上増加する可能性がある場合。

この規則は、企業間の戦略的パートナーシップ、ジョイントベンチャー、その他類似の取引にも適用されます。

支配権変更と新規事業の同時発生：再上場が必要

DatCoの取引において、経営権の変更と新規事業の導入の両方が伴う場合、ナスダック／NYSEは多くの場合、その取引をバックドアIPOとみなします。このような場合、当該企業は以下の要件を満たす必要があります。

上場申請を再度行うこと
継続上場基準だけでなく、取引所の新規上場要件を満たすこと

新規上場要件は、株主資本や時価総額、株価、流通株式数、単元株保有者数、ガバナンス基準などにおいて、より高い基準が設けられており、継続上場基準よりもはるかに厳しいものとなっています。

取引活動、FINRAによる監視、および市場行動リスク

DatCoにとって、特に低浮動株における過剰または異常な取引活動が新たな課題として浮上しています。株価の急騰や投機的取引は、FINRAのMarket Watchを含む規制当局の注目を集め、市場行動、情報伝達、監督体制に関する照会や調査につながる可能性があります。報道によれば、FINRAは暗号資産戦略の公表前の取引活動に関する情報提供を求めるため、少なくとも200社の上場企業に連絡を取ったとされています。

DatCoはSECの監視対象に

規制当局は、DatCoの現象を見過ごしてはいません。SECの上級職員は、支配権や資本構成の変更を伴う大規模な事業転換を行う企業に関する懸念を公に認めています。

10月のスピーチで、コーポレーション・ファイナンス部門の代理部長シシリー・ラモス氏は、既存の上場企業に新規事業や新たな支配権が導入される結果となる取引にSECが注目していることを強調しました。彼女の発言は、Corp Finが開示の質、取引構造、そして投資家が変革的取引において意見を求められているか、あるいは不当に意見を封じられていないかに細心の注意を払っていることを明確に示しています。

著者

ローラ・アンソニー弁護士

設立パートナー

アンソニー、リンダー＆カコマノリス

企業法務および証券法務事務所

LAnthony@ALClaw.com

証券弁護士ローラ・アンソニー氏とその経験豊富な法律チームは、中小規模の非公開企業、上場企業、そして上場予定の非公開企業に対して継続的な企業顧問サービスを提供しています。ナスダック、NYSEアメリカン、または店頭市場（例えばOTCQBやOTCQX）で上場を目指す企業も対象です。20年以上にわたり、Anthony, Linder & Cacomanolis, PLLC（ALC）は、迅速でパーソナライズされた最先端の法的サービスをクライアントに提供してきました。当事務所の評判と人脈は、投資銀行、証券会社、機関投資家、その他の戦略的提携先への紹介など、クライアントにとって非常に貴重なリソースとなっています。当事務所の専門分野には、1933年証券法の募集・販売および登録要件の遵守（レギュレーションDおよびレギュレーションSに基づく私募取引、PIPE取引、証券トークン・オファリング、イニシャル・コイン・オファリングを含む）が含まれますが、これに限定されません。規制A/A+オファリング、S-1、S-3、S-8フォームの登録申請、S-4フォームによる合併登録、1934年証券取引法の遵守（フォーム10による登録、フォーム10-Q、10-K、8-Kおよび14C情報・14A委任状報告書）、あらゆる形態の株式公開取引、合併・買収（リバースマージャーおよびフォワードマージャーを含む）、ナスダックやNYSEアメリカンを含む証券取引所のコーポレートガバナンス要件への申請および遵守、一般企業取引、一般契約および事業取引が含まれます。アンソニー氏と当事務所は、合併・買収取引において、買収対象企業と買収企業の双方を代理し、合併契約、株式交換契約、株式購入契約、資産購入契約、組織再編契約などの取引文書を作成します。ALC法務チームは、公開企業が連邦および州の証券法やSROs要件に準拠することを支援しており、15c2-11申請、社名変更、リバース・フォワードスプリット、本拠地変更などにも対応しています。アンソニー氏はまた、中堅・中小企業向けの業界ニュースのトップ情報源であるSecuritiesLawBlog.comの著者であり、企業財務に特化したポッドキャスト『LawCast.com: Corporate Finance in Focus』のプロデューサー兼ホストでもあります。当事務所は、ニューヨーク、ロサンゼルス、マイアミ、ボカラトン、ウェストパームビーチ、アトランタ、フェニックス、スコッツデール、シャーロット、シンシナティ、クリーブランド、ワシントンD.C.、デンバー、タンパ、デトロイト、ダラスなど、多くの主要都市でクライアントを代理しています。

アンソニー氏はフロリダ州立大学ロースクールを優秀な成績で卒業しており、1993年から弁護士として活動しています。

Anthony, Linder & Cacomanolis, PLLC にお問い合わせください。技術的な内容に関するご質問もいつでも歓迎いたします。

Anthony, Linder & Cacomanolis, PLLC を Facebook、LinkedIn、YouTube、Pinterest、Twitter でフォローしてください。

Anthony, Linder & Cacomanolis, PLLCは、本情報を教育目的の一般情報として提供しています。本情報は一般的な内容であり、法的助言を構成するものではありません。さらに、本情報の利用や送受信は、当事務所との弁護士–依頼者関係を成立させるものではありません。したがって、本情報を通じて当事務所と行ういかなる通信も、特権または機密として扱われることはありません。

Following the run-away success of Strategy, Inc. (formerly MicroStrategy, Inc.), Metaplanet, Inc., MARA Holdings, Inc. and several others, a new model for public company activity emerged – a DatCo. DatCo is shorthand for a company whose primary value proposition is centered on data, technology platforms, analytics, or proprietary information, rather than a traditional operating business with established revenues. A DatCo generally buys, holds and trades in cryptocurrencies.

While the DatCo label may be new, the regulatory issues raised by these transactions are not. In fact, many DatCo formations follow a familiar playbook that squarely implicates Nasdaq and NYSE American shareholder approval rules — rules that issuers sometimes attempt to structure around, and that regulators are increasingly scrutinizing.

How DatCos Are Typically Formed

Many DatCos are formed when an existing public company — often a microcap issuer or a company whose original business has stalled — pivots to a data-driven business model. The pivot is frequently accomplished through a combination

2025年9月5日、SECは、米国市場にアクセスする外国拠点企業に関連する詐欺リスクを対象とするクロスボーダー・タスクフォースの設置を発表し、中国を高リスク管轄として明示的に名指ししました。今回のタスクフォースは、中国拠点の発行体に広範に見られる不正行為への懸念に対応するための、さらなる規制上の動きの一環と位置付けられます。

背景

SECやナスダックを含む米国の資本市場規制当局は長年にわたり、不十分な情報開示および開示体制を理由として、中国拠点企業への投資に伴うリスクについて注意喚起してきました。2020年12月には、外国企業説明責任法（HFCA法）が成立し、外国発行体に対し、公開企業会計監視委員会（PCAOB）が過去3年以内に指定された報告書の監査を実施できたこと、ならびに当該発行体の監査法人を検査できたことを証明するよう義務付けました。PCAOBが3年連続で当該企業の監査法人を検査できない場合、その企業の証券は全米証券取引所での取引が禁止されます。HFCA法に関する私の3部構成のブログ記事については、および; および; をご参照。

HFCAにもかかわらず、SECは中国拠点企業に関する開示の質、特に特定のリスクについて懸念を抱き続けています。2023年7月、SECは中国拠点企業が登録届出書および定期報告書に記載すべき情報の種類について市場に情報提供することを目的としたサンプルコメントレターを公表しました (参照）。さらにそれ以前の2022年後半には、中国拠点企業に関連する取引により、ナスダックの小型株IPO市場が一時的に事実上閉鎖されました (参照）。

これらの動きにもかかわらず、中国拠点企業のIPO市場は鈍化していません。実際、2020年以降、中国企業による米国上場の申請件数は急増しており、2024年には過去最高の件数に達し、2025年も同様のペースで推移しています。規制当局は引き続き、米国株式市場へのアクセスを求める中国拠点企業に伴う投資家リスクや国家安全保障上の懸念を抱いています。例えば、2025年5月には、23州の財務責任者がSECのアトキンス議長宛に書簡を送り、中国企業の上場に関する懸念を表明しました。

規制当局は、この問題への対応と是正に引き続き取り組んでいます。2025年9月、ナスダックは、中国拠点企業に対し、上場基準の強化を提案しました。これには、最低2,500万ドルの引受保証付きオファリングを条件とすることが含まれます（参照）。2025年10月、FINRA（金融規制機構）は、中国拠点の小型株IPOに関与した証券会社に対する調査を開始しています（参照）。

より最近では、2025年12月、ナスダックは外部第三者要因に基づき上場を拒否する裁量権を拡大・見直しました。対象となる要因には、(i) 第三者が企業の証券に影響を及ぼす不正行為を行う可能性、(ii) 同様の特徴を持つ他の企業の取引パターン、(iii) 企業に関連するアドバイザー（監査人、引受証券会社、法律事務所、ブローカー、決済会社、その他の専門サービス提供者を含む）、(iv) 不正行為発生時に米国規制当局または投資家が利用できる潜在的救済に対する外国法の影響、などが含まれます（参照）。

SECタスクフォースの重点

前述のとおり、2025年9月5日、SECは、米国市場にアクセスする外国拠点企業における詐欺リスクを対象とする越境タスクフォースの設置を発表し、中国を高リスク管轄として明確に名指ししました。タスクフォースは、SEC内の各部門と連携して、ポンプ・アンド・ダンプなどの違反行為を追及するとともに、監査人、引受会社、ブローカーディーラーなどのゲートキーパーを精査します。優先事項には、透明性が制限される政府関与の強い管轄地域や、開示規則の改訂の可能性が含まれます。

著者

ローラ・アンソニー弁護士

設立パートナー

アンソニー、リンダー＆カコマノリス

企業法務および証券法務事務所

LAnthony@ALClaw.com

アンソニー氏はフロリダ州立大学ロースクールを優秀な成績で卒業しており、1993年から弁護士として活動しています。

Anthony, Linder & Cacomanolis, PLLC にお問い合わせください。技術的な内容に関するご質問もいつでも歓迎いたします。

Anthony, Linder & Cacomanolis, PLLC を Facebook、LinkedIn、YouTube、Pinterest、Twitter でフォローしてください。

On September 5, 2025, the SEC announced a Cross-Border Task Force targeting fraud risks in foreign-based companies accessing U.S. markets, with China explicitly named as a high-risk jurisdiction. The SEC’s Task Force represents another regulatory development targeting concerns about pervasive fraud involving China based issuers.

Background

Over the years U.S. capital markets regulators, including the SEC and Nasdaq, have been vocal about the risks in investing in China based companies due to poor disclosures and disclosure controls. In December 2020 the Holding Foreign Companies Accountable Act (“HFCA”) was adopted requiring foreign-owned issuers to certify that the PCAOB has been able to audit specified reports and inspect their audit firm within the last three years. If the PCAOB is unable to inspect the company’s public accounting firm for three consecutive years, the company’s securities are banned from trading on a national exchange. For my three part blog on the HFCA see HERE; HERE; and HERE.

Despite the

In late October 2025, FINRA notified its members that it has launched an investigation into broker dealers that have worked on IPO’s involving small-cap companies based out of China. FINRA has specifically indicated that it is concerned with potential market manipulation.

FINRA’s investigation is the latest in a string of actions by US regulators and quasi governmental organizations concerned with access to U.S. markets by China based companies. In September, Nasdaq proposed to adopt additional listing criteria for companies primarily operating in China, including Hong Kong and Macau. The additional listing standards would require that all China based companies complete a minimum of a $25 million capital raise in a firm commitment public offering to go public on the Exchange (see HERE).

In June, 2025, the SEC published a concept release and request for comment on the definition of a Foreign Private Issuer (FPI) and related rules, clearly indicating that the prior definition is not suited to the

2025年9月8日、ナスダックは一連の規則改正案の最新として、トークン化証券を含むデジタル資産の取引を可能にするための規則改正を提案しました。今回の改正案の目的は、ブローカーおよび投資家が取引所でトークンを取引できることを明確に定めることにあります。この改正を実現するため、ナスダックは以下の変更を提案しています。(i) ブロックチェーンを基盤とする株式（トークン化証券を含む）を「有価証券」の定義に追加すること、(ii) トークン化証券を注文入力およびルーティング手続きに組み込むこと、(iii) トークン化証券の清算および決済の優先順位を従来の証券と同等に整合させるため、ブック処理を更新すること。

背景

米国の株式市場はこれまで、紙の証券から電子証券への移行、決済サイクルの短縮、価格情報の即時配信、アルゴリズムによる電子取引の導入など、技術革新を支える形で発展してきました。ブロックチェーンを利用したデジタル台帳技術により証券取引を記録する「トークン化」も、こうした技術革新の一つです。ナスダックは、トークン化証券の利用が規制市場、すなわち国の証券取引所や代替取引システム（ATS）上で、FINRA によって規制されたブローカーディーラー、DTC、既存の清算機関を通じて行われる限り、現行の規制枠組みは従来の証券と同様に適用されると考えています。つまり、トークン化証券のために特別な例外措置や並行した市場構造を新たに設ける必要はない、という立場です。

ナスダックは、国家市場システムが提供しているメリットや投資家保護を維持しながら、市場がトークン化を活用できると考えています。さらに今回の規則改正は、投資家および米国の取引システムを保護するために必要であるとしています。とりわけ、現行の市場構造のもとでトークン化証券の取引を認めることで、米国株式のトークン化取引を可能にすると主張しながら、実際には各プラットフォームが自ら購入・保有する証券に対するデジタル上の取引権利しか提供していない“小規模な二次的市場”が拡大・継続することを防ぐことができると述べています。

さらにナスダックは、トークン化証券の取引を受け入れるために必要なのは既存の規則や慣行に対するごく小規模な変更のみであり、広範な例外措置を認めるべきではないと主張しています。

提案されている規則改正

上記の通り、改正を実施するために、ナスダックは以下の変更を提案しています。(i) ブロックチェーンを基盤とする株式（トークン化証券を含む）を「有価証券」の定義に追加すること、(ii) 注文入力およびルーティング手続きをトークン化証券にも対応させること、(iii) トークン化証券の清算・決済の優先順位を従来の証券と同等に整合させるため、ブック処理を更新すること。

注文入力と処理

ナスダックは、有価証券の定義を改正し、取引所参加者がトークン化証券を取引できるようにすることを提案しています。本改正では、「トークン化」とは、デジタル台帳やブロックチェーン技術を利用した紙の証券のデジタル表現を指すことを明確にし、ブロックチェーンを利用しない「従来型」のデジタル証券とは区別されます。さらに定義では、トークン化証券は従来の同等クラスの証券と同一の CUSIP 番号を持ち、同等の権利・利益を有すること、かつ相互に代替可能（ファンジブル）であることが求められるとしています。ナスダックでは、トークン化証券と従来型証券を同一の注文帳で取り扱い、同じ執行優先ルールに従って取引されます。

トークン化株式証券は、従来型証券と同等の権利・利益を提供するものとみなされます。具体的には、基礎となる会社に対する株式持分を有すること、会社が株主に支払う配当を受け取る権利を有すること、株主としての議決権を行使する権利を有すること、会社清算時に残余資産の分配を受ける権利を有すること、などが含まれます。

さらに、ナスダックは注文入力規則の改正も提案しており、トークン化された形式で証券を清算・決済する意思を伝える方法を定めることとしています。ナスダックは、トークン化形式での取引希望を示すための選択可能なフラグを作成します。その後、DTC は参加者の指示に従い、DTC の規則、方針、手続きに基づいて処理を行います。

同様に、ナスダックはブック処理規則も改正し、注文にトークン化証券が含まれている、またはトークン形式での清算・決済を希望していることだけでは、その注文の取引所での執行優先順位に影響を与えないことを明確にします。

さらに、ナスダックは注文ルーティング規則も改正し、清算・決済をトークン形式で行う指定がある注文を他の取引所にルーティングした場合、注文の執行が発生した際にそのトークン化指示を DTC に伝達することを明記します。

これらの変更を除けば、ナスダックのシステムおよびマッチングエンジンに関しては、会員が株式をトークン化株式として取引するか従来型株式として取引するかにかかわらず、取引手続きや挙動は同一となります。

トークン化と取引後処理

ナスダックの提案する規則改正は、必要なインフラおよび取引後の決済サービスが DTC により整備され、かつ必要な規制当局の承認が得られた時点で発効する予定です。ナスダックによると、DTC はこのトークン化および関連する取引後決済のインフラやサービス、手続きを整備するための作業を進めているとのことです。

著者

ローラ・アンソニー弁護士

設立パートナー

アンソニー、リンダー＆カコマノリス

企業法務および証券法務事務所

LAnthony@ALClaw.com

証券弁護士ローラ・アンソニー氏とその経験豊富な法律チームは、中小規模の非公開企業、上場企業、そして上場予定の非公開企業に対して継続的な企業顧問サービスを提供しています。ナスダック、NYSEアメリカン、または店頭市場（例えばOTCQBやOTCQX）で上場を目指す企業も対象です。20年以上にわたり、Anthony, Linder & Cacomanolis, PLLC（ALC）は、迅速でパーソナライズされた最先端の法的サービスをクライアントに提供してきました。当事務所の評判と人脈は、投資銀行、証券会社、機関投資家、その他の戦略的提携先への紹介など、クライアントにとって非常に貴重なリソースとなっています。当事務所の専門分野には、1933年証券法の募集・販売および登録要件の遵守（レギュレーションDおよびレギュレーションSに基づく私募取引、PIPE取引、証券トークン・オファリング、イニシャル・コイン・オファリングを含む）が含まれますが、これに限定されません。規制A/A+オファリング、S-1、S-3、S-8フォームの登録申請、S-4フォームによる合併登録、1934年証券取引法の遵守（フォーム10による登録、フォーム10-Q、10-K、8-Kおよび14C情報・14A委任状報告書）、あらゆる形態の株式公開取引、合併・買収（リバースマージャーおよびフォワードマージャーを含む）、ナスダックやNYSEアメリカンを含む証券取引所のコーポレートガバナンス要件への申請および遵守、一般企業取引、一般契約および事業取引が含まれます。アンソニー氏と当事務所は、合併・買収取引において、買収対象企業と買収企業の双方を代理し、合併契約、株式交換契約、株式購入契約、資産購入契約、組織再編契約などの取引文書を作成します。ALC法務チームは、公開企業が連邦および州の証券法やSROs要件に準拠することを支援しており、15c2-11申請、社名変更、リバース・フォワードスプリット、本拠地変更などにも対応しています。アンソニー氏はまた、中堅・中小企業向けの業界ニュースのトップ情報源であるSecuritiesLawBlog.comの著者であり、企業財務に特化したポッドキャスト『LawCast.com: Corporate Finance in Focus』のプロデューサー兼ホストでもあります。当事務所は、ニューヨーク、ロサンゼルス、マイアミ、ボカラトン、ウェストパームビーチ、アトランタ、フェニックス、スコッツデール、シャーロット、シンシナティ、クリーブランド、ワシントンD.C.、デンバー、タンパ、デトロイト、ダラスなど、多くの主要都市でクライアントを代理しています。

アンソニー氏はフロリダ州立大学ロースクールを優秀な成績で卒業しており、1993年から弁護士として活動しています。

Anthony, Linder & Cacomanolis, PLLC にお問い合わせください。技術的な内容に関するご質問もいつでも歓迎いたします。

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On September 8, 2025, in the newest in a series of proposed rule amendments, Nasdaq has proposed amendments to enable the trading of digital assets, including tokenized securities. The purpose of the rule change is to clearly establish that brokers and investors can trade tokens on the Exchange. To effectuate the amendment, Nasdaq is proposing to (i) add blockchain backed equities, including tokenized securities, to the definition of a “security,” (ii) update order entry and routing procedures to include tokenized securities; and (iii) update book processing to align tokenized securities with the same clearance and settlement priority as traditional securities.

Background

Over the years, U.S. equity markets have transformed to support technological innovations including, for example, moving from paper to electronic securities, shortening settlement cycles, instant price dissemination, and allowing for algorithmic electronic trading. Tokenization, which involves recording securities transactions using digital ledger blockchain technology, is such an innovation. Nasdaq believes that as long as the use of

On May 15, 2025, the SEC Division of Trading and Markets and Office and FINRA’s Office of General Counsel withdrew their joint statement on broker dealer custody of digital asset securities. The original joint statement had been issued on July 8, 2019 (see HERE). This original statement has oft been thought of as the reason that broker dealers have not (could not) adopt any broad ranging policies or procedures related to digital assets.

The withdrawal of the joint statement, together with the slew of other recent activity from the SEC related to digital assets, (see HERE for example) is an important step towards more widespread adoption of digital asset trading, allowing retail investors to aggregate their investments with their trusted broker dealer advisors.

Refresher On Original Joint Statement/Concerns

Broker-dealers that hold funds and securities must comply with Exchange Act Rule 15c3-3 (the “Customer Protection Rule”), which generally requires the broker to maintain physical possession or control over

Ten weeks of blogs on the new SPAC and shell company rules provides the perfect segue to discuss exactly what is a “shell company” in the context of a reverse merger and its implications – including one heartburn inducing unintended consequence. As I have been discussing over the past weeks, the new rules specifically apply to any reverse merger with a shell company, not just a SPAC shell company.

New Rule 145a deems any business combination of a reporting shell company involving another entity that is not a shell company to entail a sale of securities to the reporting shell company’s shareholders. Nothing in Rule 145a would prevent or prohibit the use of a valid exemption, if available, for the deemed sale of securities; however, I know of no such available exemption and the SEC rule release not only does not suggest one but specifically clarifies that Section 3(a)(9) would not be available.

As a result, the SEC release suggests

On December 15, 2023, the SEC issued a staff report on the accredited investor definition. The report comes three years after the most recent amendments to the accredited investor definition (see HERE).

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) requires the SEC to review the accredited investor definition, as relates to natural persons, at least once every four years to determine whether the definition should be modified or adjusted. The last two reports can be read HERE and HERE.

The current report focuses on the composition of the accredited investor demographic, including since the last definition amendments; the extent to which accredited investors have the financial sophistication, ability to sustain the risk of loss of investment, and access to information that have traditionally been associated with an ability to fend for themselves; and accredited investor participation in exempt offerings.

I’ve included the complete current accredited investor definition at the end of this blog.

Background

All

As the SEC continues its onslaught against the crypto industry, including the filing of high-profile actions against Binance, which operates the largest crypto asset trading platform in the world, and Coinbase, a multi-billion-dollar crypto trading platform, FINRA has quietly approved OTC Markets to provide trading services for digital asset securities.

OTC Markets announced the approval in early May but don’t expect any activity in the near future. Concurrent with announcing the approval, OTC Markets CEO, R. Cromwell Coulson, stated:

“We also recently received FINRA approval to permit digital asset securities to be traded by broker-dealers on OTC Link ATS. This approval furthers our mission of operating regulated markets for broker-dealers and issuers of securities. While it will be some time until the regulatory framework and infrastructure develop, we believe our markets are well-positioned to be part of new trading, data, and disclosure solutions for these securities.”

OTC Markets is clearly putting itself in a position to

Effective June 3, 2023, FINRA will be replacing and updating the system for filing a Company Related Action Notification form, which form begins the process with FINRA to effectuate a corporate action initiated by a company trading on OTC Markets. The new process allows companies to submit forms, get updates and respond to comments through an electronic FINRA gateway.

Background/Rule 6490

Effective September 27, 2010, the SEC approved FINRA Rule 6490 (Processing of Company Related Actions). Rule 6490 requires that corporations whose securities are trading on the OTC Markets notify FINRA in a timely manner of certain corporate actions, such as dividends, forward or reverse splits, rights or subscription offerings, symbol changes and name changes. The Rule grants FINRA discretionary power when processing documents related to the announcements.

Rule 6490 works in conjunction with Exchange Act Rule 10b-17. Rule 10b-17 states that “it shall constitute a manipulative or deceptive device or contrivance as used in section 10(b) of

In the year and a half since Gary Gensler made it clear to the world that he intends to focus on the crypto “wild west” (see HERE) things have gone from bad to worse for the industry. Of course, it is not all the SEC’s extreme crypto scrutiny that is causing problems, but the very real crypto winter including the collapse of the FTX exchange and its FTX Future Fund, and the realization that the metaverse of tomorrow, will actually not be here until… tomorrow have all added to industry problems. Not to mention a slew of bankruptcy filings (FTX, Blockfi, Celsius and Voyager) and several other precarious financial positions (Blockchain.com, Coinbase, Crypto.com and Genesis, to name a few).

However, putting aside the crypto industry financial crisis, the U.S. regulators, including the SEC, FINRA and national exchanges, are scrutinizing any business with even a modicum of crypto focus to the point where it is almost impossible to move

Following a continuous stream of litigation against small-cap and penny stock convertible debt lenders, the SEC has proposed some statutory changes to the definition of a “dealer” under the Exchange Act. The SEC’s enforcement attack on convertible debt lenders began in 2017 and has been decried by industry participants as regulation by enforcement which, unfortunately, is not resulting in judicial orders or settlements offering clear guidance (see HERE). Also, unfortunately, the proposed new rules, which were published in March 2022 and are likely to reach final rule stage this year, still do not help small-cap investors navigate the regulatory highway.

The rule is intended to require certain proprietary or principal traders and liquidity providers to register as either a dealer or government securities dealer as applicable. The proposed rules would amend Exchange Act Rules 5a5-4 and 3a44-2 to enhance the definition of “as part of a regular business” in Sections 3(a)(5) and 3(a)(44) of the Exchange Act.

Proposed Rules

On August 24, 2022, the SEC released its draft strategic plan for the fiscal years 2022 to 2026 and sought public comment on same. The three primary goals set forth in the plan include: (i) protecting working families against fraud, manipulation, and misconduct; (ii) developing and implementing a robust regulatory framework that keeps pace with evolving markets, business models, and technologies; and (iii) supporting a skilled workforce that is diverse, equitable, inclusive, and is fully equipped to advance agency objectives.

To achieve these goals, the SEC intends to use of market and industry data to prevent, detect, and prosecute improper behavior. The SEC also seeks to modernize design, delivery, and content of disclosures to investors so they can access consistent, comparable, and material information while making investment decisions.

These statements are very broad, but even at face value, the different focus of the SEC as compared to the last plan published in 2018 is clear. In 2018 the three primary

On January 27, 2022, the SEC approved the country’s 17^th stock exchange, the first one of which will utilize blockchain technology. The new BSTX is a subsidiary of the Boston BOX Exchange and is a joint venture with tZero, which is providing the blockchain technology. The BSTX is expected to begin operations sometime after June 2022 and will initially only trade securities that first list directly on the BSTX. Once listed on the BSTX, a security can dual trade on other exchanges.

To begin, the BSTX will trade traditional securities but intends to move into tokenized securities and intends to brand itself with the look and feel of a digital asset exchange as opposed to the more traditional Nasdaq look. In December 2020, the SEC rejected the Exchange’s original plan to exclusively trade tokenized securities. The BOX then filed new proposed rules in May 2021 which, after 3 amendments, were approved by the SEC on January 27^th.

SEC Report On Meme Stocks

On October 18, 2021, the SEC released a report on the meme stock craze that caused the securities of companies like GameStop Corp. to soar to unprecedented high trading prices and volume. Commissioners Hester Peirce and Elad Roisman criticized the report as being used as an excuse to add or consider adding additional regulations in the areas of conflicts of interest, payment for order flow, off-exchange trading, and wholesale market making when, however, no causal connection between the meme stock trading and these other factors has been established. I found the report interesting for the background and discussion on the U.S. trading markets.

Market Structure

From the perspective of individual investors, the lifecycle of a stock trade starts with an investor placing an order through an account they establish with a broker-dealer. The broker-dealer then routes the order for execution to a trading center, such as a national securities exchange, an alternative trading system (“ATS”), or an off-exchange market

Public Market Listing Standards

One of the bankers that I work with often once asked me if I had written a blog with a side-by-side comparison of listing on Nasdaq vs. the OTC Markets and I realized I had not, so it went on the list and with the implementation of the new 15c2-11 rules, now seems a very good time to tackle the project. I’ve added NYSE American to the list as well.

Quantitative and Liquidity Listing Standards

Nasdaq Capital Markets

To list its securities on Nasdaq Capital Markets, a company is required to meet: (a) certain initial quantitative and qualitative requirements and (b) certain continuing quantitative and qualitative requirements. The quantitative listing thresholds for initial listing are generally higher than for continued listing, thus helping to ensure that companies have reached a sufficient level of maturity prior to listing. NASDAQ also requires listed companies to meet stringent corporate governance standards.

Requirements

Equity Standard

Market Value of

Listed Securities

Standard

Net

2021 Annual Report of Office of Advocate for Small Business Capital Formation

The Office of the Advocate for Small Business Capital Formation (“Office”) has delivered a report to Congress following the 40^th annual small business forum (“Report”). The Report includes recommendations of the Office and its annual forum participants. The forum itself featured panelists and discussions on (i) navigating ways to raise early rounds; (ii) diligence including how savvy early-stage investors build diversified portfolios; (iii) tools for emerging and smaller funds and their managers; and (iv) perspectives on smaller public companies. The forum itself had a focus on diversity, including panel speakers and discussion topics. A clear message across the board is that women- and minority-owned businesses face the biggest challenges in the capital markets.

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). One of the core tenants of the Office is recognizing that small businesses

A Review of FINRA’s Corporate Finance Rule

As the strongest U.S. IPO market in decades continues unabated, it seems a good time to talk about underwriter’s compensation. FINRA Rule 5110 (Corporate Financing Rule – Underwriting Terms and Arrangements) governs the compensation that may be received by an underwriter in connection with a public offering.

Rule 5110 – The “Corporate Financing Rule”

Rule 5110 regulates underwriting compensation and prohibits unfair arrangements in connection with the public offerings of securities. The Rule prohibits member firms from participating in a public offering of securities if the underwriting terms and conditions, including compensation, are unfair as defined by FINRA. The Rule requires FINRA members to make filings with FINRA disclosing information about offerings they participate in, including the amount of all compensation to be received by the firm or its principals, and affiliations and relationships that could result in the existence of a conflict of interest. As more fully described herein, underwriter’s compensation is subject to lock-up provisions.

Filing Requirements

OTC Markets; Rule 144; The SPCC

Small public companies are in trouble and they need help now! Once in a while there is a perfect storm forming that can only result in widespread damage and that time is now for small public companies, especially those that trade on the OTC Markets. The trains on track to collide include a combination of (i) the impending amended Rule 15c2-11 compliance deadline (which alone would be and is a clear positive); (ii) the proposed Rule 144 rule changes to eliminate tacking upon the conversion of market adjustable securities; (iii) the SEC onslaught of litigation against micro-cap convertible note investors claiming unlicensed dealer activity; (iv) the OTC Markets new across the board unwillingness to allow companies to move from the Pink to the QB if they have outstanding convertible debt; and (v) the SEC’s unwillingness to recognize the OTC Pink as a trading market and its implications on re-sale registration statements.

Any one of these factors alone would not

SEC Proposed Conditional Exemption For Finders

Over the years I have written many times about exemptions to the broker-dealer registration requirements for entities and individuals that assist companies in fundraising and related services (see, for example: HERE). Finally, after years of advocating for SEC guidance on the topic, the SEC has proposed a conditional exemption for finders assisting small businesses in capital raising. The proposed exemption will allow for the use of finders to assist small businesses in raising capital from accredited investors.

In its press release announcing the proposal, SEC Chair Clayton acknowledged the need for guidance, stating, “[T]here has been significant uncertainty for years, however, about finders’ regulatory status, leading to many calls for Commission action, including from small business advocates, SEC advisory committees and the Department of the Treasury. If adopted, the proposed relief will bring clarity to finders’ regulatory status in a tailored manner that addresses the capital formation needs of certain smaller issuers while preserving investor protections.”

Separately, New York

The SEC Has Adopted Final Amendments To Rule 15C2-11; Major Change For OTC Markets Companies

Despite an unusual abundance of comments and push-back, on September 16, 2020, one year after issuing proposed rules (see HERE), the SEC has adopted final rules amending Securities Exchange Act (“Exchange Act”) Rule 15c2-11. The primary purpose of the rule amendment is to enhance retail protection where there is little or no current and publicly available information about a company and as such, it is difficult for an investor or other market participant to evaluate the company and the risks involved in purchasing or selling its securities. The SEC believes the final amendments will preserve the integrity of the OTC market, and promote capital formation for issuers that provide current and publicly available information to investors.

From a high level, the amended rule will require that a company have current and publicly available information as a precondition for a broker-dealer to either initiate or continue to quote its securities; will narrow reliance on certain of the rules

Small Business Advocate Urges Capital Raising Relief

On March 4, 2020, the SEC published proposed rule changes to harmonize, simplify and improve the exempt offering framework. 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.

I’ve written a five-part series detailing the rule changes, the first of which can be read HERE. My plan to publish the five parts in five consecutive weeks was derailed by the coronavirus and more time-sensitive articles on relief for SEC filers and disclosure guidance, but will resume in weeks that do not have more pressing Covid-19 topics.

On April 2, 2020, the SEC Small Business Capital Formation Advisory Committee

OTCQB And OTC Pink Rule Changes

In December 2019 the OTC Markets updated its Pink Disclosure Guidelines and Attorney Letter Agreement and Guidelines. The Pink disclosure guidelines and attorney letter apply to companies that elect to report directly to OTC Markets pursuant to its Alternative Reporting Standard. Furthermore, in January 2020 OTC Markets amended the OTCQB standards related to the disclosure of convertible debt and notification procedures for companies undergoing a change in control. The OTCQB also updated its criteria for determining independence of directors, and added additional transfer agent requirements for Canadian Companies.

The OTC Markets divide issuers into three (3) levels of quotation marketplaces: OTCQX, OTCQB and OTC Pink Open Market. The OTC Pink Open Market, which involves the highest-risk, highly speculative securities, is further divided into three tiers: Current Information, Limited Information and No Information. Companies trading on the OTCQX, OTCQB and OTC Pink Current Information tiers of OTC Markets have the option of reporting directly to OTC Markets under its Alternative

SEC Fall 2019 Regulatory Agenda

In late 2019, the SEC published its latest version of its semiannual regulatory agenda and plans for rulemaking with the U.S. Office of Information and Regulatory Affairs. The Office of Information and Regulatory Affairs, which is an executive office of the President, publishes a Unified Agenda of Regulatory and Deregulatory Actions (“Agenda”) with actions that 60 departments, administrative agencies and commissions plan to issue in the near and long term. The Agenda is published twice a year, and for several years I have blogged about each publication.

Like the prior Agendas, the spring 2019 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 has increased with 47 items as compared to 40 on the

SEC Investor Advisory Committee Meeting

On November 7, 2019, the SEC Investor Advisory Committee held a meeting on the topics of (i) whether investors use environmental, social and governance (ESG) data in making investment and capital allocation decisions; and (ii) the SEC’s recent concept release on harmonization of securities offering exemptions. For more on ESG matters, see HERE and for my blog on the SEC’s concept release on exempt offerings, see HERE. Both SEC Chair Jay Clayton and Commissioner Allison Herren Lee made remarks before the committee. As always, it is helpful in navigating our complex securities laws and regulatory priorities to stay informed on matters involving SEC decision makers and policy setters.

The Investor Advisory Committee was created by the Dodd-Frank Act to advise the SEC on regulatory priorities, the regulation of securities products, trading strategies, fee structures, the effectiveness of disclosure, and on initiatives to protect investor interests and to promote investor confidence and the integrity of the securities marketplace. The Dodd-Frank

The SEC, FinCEN And CFTC Issue A Joint Statement On Digital Assets

On October 11, 2019 the SEC, FinCEN and CFTC issued a joint statement on activities involving digital assets. Various agencies have been consistently working together, with overlapping jurisdiction, on matters involving digital assets and distributed ledger technology. Earlier, in August, the SEC and FINRA issued a joint statement on the custody of digital assets, including as it relates to broker-dealers and investment advisors (see HERE).

The purpose of the joint statement is to remind persons engaged in activities involving digital assets of their anti-money laundering and countering the financing of terrorism (AML/CFT) obligations under the Bank Secrecy Act (BSA). AML/CFT obligations apply to entities that the BSA defines as “financial institutions,” such as futures commission merchants and introducing brokers obligated to register with the CFTC, money services businesses (MSBs) as defined by FinCEN (for more information on MSBs see HERE), and broker-dealers and mutual funds obligated to register

An IPO Without The SEC

On January 23, 2019, biotechnology company Gossamer Bio, Inc., filed an amended S-1 pricing its $230 million initial public offering, taking advantage of a rarely used SEC Rule that will allow the S-1 to go effective, and the IPO to be completed, 20 days from filing, without action by the SEC. Since the government shutdown, several companies have opted to proceed with the effectiveness of a registration statement for a follow-on offering without SEC review or approval, but this marks the first full IPO, and certainly the first of any significant size. The Gossamer IPO is being underwritten by Bank of America Merrill Lynch, SVB Leerink, Barclays and Evercore ISI. On January 24, 2019, Nasdaq issued five FAQ addressing their position on listing companies utilizing Section 8(a). Although the SEC has recommenced full operations as of today, there has non-the-less been a transformation in the methods used to access capital markets, and the use of 8(a) is just

FINRA Examines Fintech Including Blockchain

On July 30, 2018, the Financial Industry Regulatory Authority (FINRA) published a Special Notice seeking public comments on how FINRA can support fintech developments including those related to data aggregation services, supervisory processes, including with the use of artificial intelligence, and the development of a taxonomy-based, machine-readable rulebook. The Special Notice, and fintech in general, necessarily includes blockchain technology, a topic FINRA has been examining for a few years now. Last July, FINRA held a Blockchain Symposium to assess the use of distributed ledger technology (DLT) in the financial industry, and earlier in January 2017 FINRA issued a report entitled “Distributed Ledger Technology: Implications of Blockchain for the Securities Industry” on the topic (see HERE).

Also, on July 6, 2018, FINRA sent Regulatory Notice 18-20 to its members asking all FINRA member firms to notify FINRA if they engage in activities related to digital assets such as cryptocurrencies, virtual coins and tokens. FINRA informs members that it is

Going Public Without An IPO

On April 3, 2018, Spotify made a big board splash by debuting on the NYSE without an IPO. Instead, Spotify filed a resale registration statement registering the securities already held by its existing shareholders. The process is referred to as a direct listing. As most of those shareholders had invested in Spotify in private offerings, they were rewarded with a true exit strategy and liquidity by becoming the company’s initial public float.

In order to complete the direct listing process, NYSE had to implement a rule change. NASDAQ already allows for direct listings, although it has historically been rarely used. To the contrary, a direct listing has often been used as a going public method on the OTC Markets and in the wake of Spotify, may gain in popularity on national exchanges as well.

As I will discuss below, there are some fundamental differences between the process for OTC Markets and for an exchange. In particular, when completing a direct

OTC Markets Issues Comment Letters On FINRA Rules 6432 And 5250; The 15c2-11 Rules

January 8, 2018, OTC Markets Group, Inc. (“OTC Markets”) submitted a comment letter to FINRA related to FINRA Rule 6432. Rule 6432 requires that a market maker or broker-dealer have the information specified in Securities Exchange Act Rule 15c2-11 before making a quotation in a security on the over-the-counter market. Although I summarize the salient points of the OTC Markets comment letter, I encourage those interested to read the entire letter, which contains an in-depth analysis and comprehensive arguments to support its position. On February 8, 2018, OTC Markets submitted a second comment letter to FINRA, this one related to FINRA Rule 5250. Rule 5250 prohibits companies from compensating market makers in connection with the preparation and filing of a Form 211 application.

Rule 6432 – Compliance with the Information Requirements of SEA Rule 15c2-11

Subject to certain exceptions, including the “piggyback exception” discussed below, Rule 6432 requires that all broker-dealers have and maintain certain information on a

OTC Markets Group Establishes A Stock Promotion Policy

As OTC Markets Group continues to position itself as a respected venture trading platform, it has adopted a new stock promotion policy and best practices guidelines to improve investor transparency and address concerns over fraudulent or improper stock promotion campaigns. The stock promotion policy and best practices guidelines are designed to assist companies with responsible investor relations and to address problematic issues. Recognizing that fraudulent stock promotion is a systemic problem requiring an all-fronts effort by industry participants and regulators, the new policy focuses on transparency and disclosure of current information, and the correction of false statements or materially misleading information issued by third parties.

For several years, OTC Markets Group has been delineating companies with a skull-and-crossbones sign where they have raised concerns such as improper or misleading disclosures, spam campaigns, questionable stock promotion, investigation of fraudulent or other criminal activity, regulatory suspensions or disruptive corporate actions. While labeled with a skull and crossbones, a company that does not

FINRA Proposes Expansion Of The OTCBB

In August 2016, FINRA quietly requested comment on a proposal to expand the now largely dormant OTC Bulletin Board quotation service (“OTCBB”) as a backup inter-dealer quotation system for OTC Equity securities. As part of the proposal, the OTCBB would be renamed and branded as the Over the Counter Display Facility or “ODF.” Previously, on October 7, 2014, the SEC published a release instituting proceedings to determine whether to approve FINRA’s request to delete the rules related to, and the operations of, the OTCBB. My blog on the proposal can be read HERE.

However, on March 12, 2015, FINRA withdrew the proposed rule change and request to delete the OTCBB. Although the March 12, 2015 withdrawal did not cite reasons, in its new request for comment, FINRA indicates it withdrew the proposal in response to SEC staff requests that FINRA continue to operate alternative quotation facility.

Since that time the OTCBB has remained largely relatively dormant. According

FINRA Issues New Guidance On Communications With The Public, Including Social Media

In April 2017 FINRA issued Regulatory Notice 17-18 providing additional guidance on the use of social media and digital communications by member firms and persons associated with member firms. The guidance specifically relates to FINRA Rule 2210 – Communications with the Public, and supplements previously issued guidance in Regulatory Notices 10-06 and 11-39, published in 2011. The new guidance is in the form of FAQ’s and concentrates on the areas of recordkeeping, third-party posts and hyperlinks to third-party sites.

I have previously written about the SEC’s guidance on social media use by companies, including as a method for communications with investors and the public. The most recent blog is HERE and includes hyperlinks to prior blogs, including a three-part summary of the SEC Guidance on Social Media and Websites for Company Announcements and Communications.

Brief Overview of Rule 2210

FINRA Rule 2210 governs communications by FINRA member firms and associated persons, including: (i) institutional communications – including any written or

An Introduction To Distributed Ledger Technology (Blockchain Technology)

On July 13, 2017, FINRA held a Blockchain Symposium to assess the use of distributed ledger technology (DLT) in the financial industry, including the maintenance of shareholder and corporate records. DLT is commonly referred to as blockchain. The symposium included participation by the Office of the Comptroller of Currency, the US Commodity Futures Trading Commission (CFTC), the Federal Reserve Board and the SEC.

FINRA also published a report earlier in the year discussing the implications of DLT for the securities industry. Delaware, Nevada and Arizona have already passed statutes allowing for the use of DLT for corporate and shareholder records. This is the first in many blogs that will discuss DLT as this exciting new era of technology continues to unfold and impact the securities markets. In this blog I will discuss FINRA’s report published in January 2017 and in the next in the series, I will summarize the recent SEC investigative report on initial coin offerings and conclusion

SEC Chair Jay Clayton Discusses Direction Of SEC

In a much talked about speech to the Economic Club of New York on July 12, 2017, SEC Chairman Jay Clayton set forth his thoughts on SEC policy, including a list of guiding principles for his tenure. Chair Clayton’s underlying theme is the furtherance of opportunities and protection of Main Street investors, a welcome viewpoint from the securities markets’ top regulator. This was Chair Clayton’s first public speech in his new role and follows Commissioner Michael Piwowar’s recent remarks to the SEC-NYU Dialogue on Securities Market Regulation largely related to the U.S. IPO market. For a summary of Commissioner Piwowar’s speech, read HERE.

Guiding Principles

Chair Clayton outlined a list of eight guiding principles for the SEC.

#1: The SEC’s Mission is its touchstone

As described by Chair Clayton, the SEC has a three part mission: (i) to protect investors; (ii) to maintain fair, orderly and efficient markets, and (iii) to facilitate capital formation. Chair Clayton stresses that it

Addressing the SEC White Paper on OTC Equities

The SEC recently published a paper on OTC equity securities on their website. While I am always happy to see more research around OTC equities, I am surprised by the paper’s overly negative and misinformed conclusions about the growth in OTC dollar volumes.

Moreover, I am concerned that these flawed conclusions, drawn from outdated research and a study of a small group of securities subject to investigative requests by the SEC or FINRA, will be used to develop new regulations that harm capital formation. Regulatory action based on this skewed sample could negatively impact the vast majority of companies that trade successfully on the OTC Markets.

The OTC Markets are More Transparent Today

The SEC’s paper, “Outcomes of Investing in OTC Stocks,” by Joshua White, does not address the improvements in transparency and technology made over the past several years. Instead, it focuses on negative outcomes for investors of Pink companies that provide no information to the market.

Academic studies

SEC Announces Examination Priorities For 2017

On January 12, 2017, the SEC announced its Office of Compliance Inspections and Examinations (OCIE) priorities for 2017. The OCIE examines and reviews a wide variety of financial institutions, including investment advisors, investment companies, broker-dealers, transfer agents, clearing agencies and national securities exchanges. The OCIE examination goals are to promote compliance, prevent fraud, identify risk and inform policy.

The priorities this year have a primary focus on (i) protecting retail investors, especially those saving for retirement; (ii) assessing market-wide risks; and (iii) new forms of technology, including automated investments advice.

The SEC shares its annual examination priorities as a heads-up and to encourage industry participants to conduct independent reviews and make efforts for increased compliance, prior to an SEC examination, investigation or potential enforcement proceeding. Moreover, the SEC chooses its priority list in conjunction with discussions with all divisions of the SEC and other market regulators and identifies what it believes are the areas that present heightened risk to investors

SEC Has Approved FINRA’s New Category Of Broker-Dealer For “Capital Acquisition Brokers”

On August 18, 2016, the SEC approved FINRA’s rules implementing a new category of broker-dealer called “Capital Acquisition Brokers” (“CABs”), which limit their business to corporate financing transactions. FINRA first published proposed rules on CABs in December 2015. My blog on the proposed rules can be read HERE. In March and again in June 2016, FINRA published amendments to the proposed rules. The final rules enact the December proposed rules as modified by the subsequent amendments.

A CAB will generally be a broker-dealer that engages in M&A transactions, raising funds through private placements and evaluating strategic alternatives and that collects transaction-based compensation for such activities. A CAB will not handle customer funds or securities, manage customer accounts or engage in market making or proprietary trading.

Description of Capital Acquisition Broker (“CAB”)

There are currently FINRA-registered firms which limit their activities to advising on mergers and acquisitions, advising on raising debt and equity capital in private placements or advising on

FinCEN Updates Due Diligence Rules

On May 11, 2016, the Financial Crimes Enforcement Network (“FinCEN”) issued new final rules under the Bank Secrecy Act requiring financing institutions, including brokerage firms, to adopt additional anti-money laundering (AML) procedures that include specific due diligence and ongoing monitoring requirements related to customer risk profiles and customer information. In addition, the new rules require financial institutions to collect and verify information about beneficial owners and control person of legal entity customers.

The Securities Exchange Act of 1934 (“Exchange Act”) specifically requires brokerage firms to comply with the Bank Secrecy Act. FinCEN provides minimum rules. Brokerage firms are also required to comply with AML rules established by FINRA, including FINRA Rule 3310. The purpose of the AML rules is to help detect and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation. FINRA also provides a template to assist small firms in establishing and complying with AML procedures. As

DTC Again Proposes Procedures For Issuers Subject To Chills And Locks

On June 3, 2016, the DTC filed a new set of proposed rules to specify procedures available to issuers when the DTC imposes or intends to impose chills or locks. The issue of persistent and increasing chills and global locks which once dominated many discussions related to the small- and micro-cap space has dwindled in the last year or two. The new proposed rule release explains the change in DTC procedures and mindset related to its function in combating the deposit and trading of ineligible securities.

Background

On October 8, 2013, I published a blog and white paper providing background and information on the Depository Trust Company (“DTC”) eligibility, chills and locks and the DTC’s then plans to propose new rules to specify procedures available to issuers when the DTC imposes or intends to impose chills or locks (see my blog HERE). On December 5, 2013, the DTC filed these proposed rules with the SEC and on December 18,

SEC Continues Efforts To Prevent Microcap Fraud

As I’ve written about numerous times in the past, a primary agenda of the SEC and FINRA is to prevent small- and micro-cap fraud. On March 23, 2016, the SEC charged Guy Gentile with penny stock fraud. The SEC complaint, as well as numerous industry articles and a blog by Mr. Gentile himself, reveal in-depth efforts by the SEC together with FINRA and the FBI and DOJ to remove recidivist and bad actors from the micro-cap system. While the methods used by the regulators have been the subject of heated debates and articles, the message and result remain that the SEC is committed to its efforts to deter securities law violations.

Although small- and micro-cap fraud has always been an important area of concern and enforcement by the SEC since the financial crisis of 2008, it has increasingly been a focus. Regulators have amplified their efforts through regulations and stronger enforcement, including the SEC Broken Windows policy, increased Dodd-Frank whistleblower

House Passes More Securities Legislation

In what must be the most active period of securities legislation in recent history, the US House of Representatives has passed three more bills that would make changes to the federal securities laws. The three bills, which have not been passed into law as of yet, come in the wake of the Fixing American’s Surface Transportation Act (the “FAST Act”), which was signed into law on December 4, 2015.

The 3 bills include: (i) H.R. 1675 – the Capital Markets Improvement Act of 2016, which has 5 smaller acts imbedded therein; (ii) H.R. 3784, establishing the Advocate for Small Business Capital Formation and Small Business Capital Formation Advisory Committee within the SEC; and (iii) H.R. 2187, proposing an amendment to the definition of accredited investor. None of the bills have been passed by the Senate as of yet.

Meanwhile, the SEC continues to finalize rulemaking under both the JOBS Act, which was passed into law on April 5,

State Blue Sky Concerns; Florida and New York

I have often written about state blue sky compliance and issues in completing offerings that do not pre-empt state law, including Tier 1 of Regulation A+ and initial or direct public offerings on Form S-1. I’ve also often expressed my opinion that the SEC, together with FINRA, is best suited to govern most securities-related registrations and exemptions, including both for offerings and broker-dealer matters, and that the states should be more focused on state-specific registrations and exemptions (such as intrastate offerings) and investigation and enforcement with respect to fraud or deceit, or unlawful conduct.

Despite the SEC support for the NASAA-coordinated review program to simplify the state blue sky process for securities offerings, such as under Tier 1 of Regulation A+, only 43 states participate. I say “only” in this context because the holdouts – including, for example, Florida, New York, Arizona and Georgia – are extremely active states for small business development and private capital formation. Moreover, even

FINRA Proposes New Category Of Broker-Dealer For “Capital Acquisition Brokers”

In December, 2015, FINRA proposed rules for a whole new category of broker-dealer, called “Capital Acquisition Brokers” (“CABs”), which limit their business to corporate financing transactions. In February 2014 FINRA sought comment on the proposal, which at the time referred to a CAB as a limited corporate financing broker (LCFB). Following many comments that the LCFB rules did not have a significant impact on the regulatory burden for full member firms, the new rules modify the original LCFB proposal in more than just name. The new rules will take effect upon approval by the SEC and are currently open to public comments.

A CAB will generally be a broker-dealer that engages in M&A transactions, raising funds through private placements and evaluating strategic alternatives and that collects transaction based compensation for such activities. A CAB will not handle customer funds or securities, manage customer accounts or engage in market making or proprietary trading.

As with all FINRA rules, the proposed

SEC Advisory Committee Recommendations Related To Finders

On September 23, 2015, the SEC Advisory Committee on Small and Emerging Companies (the “Advisory Committee”) met and finalized its recommendation to the SEC regarding the regulation of finders and other intermediaries in small business capital formation transactions. This is a topic I have written about often, including a recent comprehensive blog which can be read HERE.

By way of reminder, the Committee was organized by the SEC to provide advice on SEC rules, regulations and policies regarding “its mission of protecting investors, maintaining fair, orderly and efficient markets and facilitating capital formation” as related to “(i) capital raising by emerging privately held small businesses and publicly traded companies with less than $250 million in public market capitalization; (ii) trading in the securities of such businesses and companies; and (iii) public reporting and corporate governance requirements to which such businesses and companies are subject.”

The Advisory Committee made four recommendations related to the regulation of finders and other

Finders- The Facts Related To Broker-Dealer Registration Requirements

Introduction

As a recurring topic, I discuss exemptions to the broker-dealer registration requirements for entities and individuals that assist companies in fundraising and related services. I have previously discussed the no-action-letter-based exemption for M&A brokers, the exemptions for websites restricted to accredited investors and for crowdfunding portals as part of the JOBS Act and the statutory exemption from the broker-dealer registration requirements found in Securities Exchange Act Rule 3a4-1, including for officers, directors and key employees of an issuer. I have also previously published a blog on the American Bar Association’s recommendations for the codification of an exemption from the broker-dealer registration requirements for private placement finders. I’ve included links to each of these prior articles in the conclusion to this blog.

A related topic with a parallel analysis is the use of finders for investors and investor groups, an activity which has become prevalent in today’s marketplace. In that case the investor group utilizes the services of a finder

Going Public Transactions For Smaller Companies: Direct Public Offering And Reverse Merger

Introduction

One of the largest areas of my firms practice involves going public transactions. I have written extensively on the various going public methods, including IPO/DPOs and reverse mergers. The topic never loses relevancy, and those considering a transaction always ask about the differences between, and advantages and disadvantages of, both reverse mergers and direct and initial public offerings. This blog is an updated new edition of past articles on the topic.

Over the past decade the small-cap reverse merger, initial public offering (IPO) and direct public offering (DPO) markets diminished greatly. The decline was a result of both regulatory changes and economic changes. In particular, briefly, those reasons were: (1) the recent Great Recession; (2) backlash from a series of fraud allegations, SEC enforcement actions, and trading suspensions of Chinese companies following reverse mergers; (3) the 2008 Rule 144 amendments, including the prohibition of use of the rule for shell company and former shell company shareholders; (4) problems

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

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 includes companies that meet the following $3

SEC Congressional Testimony – Part 3

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 Ceresney, 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.

In this last blog in the series I am summarizing the testimony of Stephen Luparello, Director of the Division of Trading and Markets, on “Venture Exchanges and Small-Cap Companies.” The topic of venture exchanges and small-cap companies is of particular importance to me and my clients – it is the world in which we participate.

On May 5, 2015, I published a blog introducing and discussing the

SEC Proposes Broadening Of Broker-Dealer Registration Rules To Include Proprietary And High-Frequency Traders

On March 25, 2015, the SEC proposed rule amendments to require high-frequency and off-exchange traders to become members of FINRA. The amendments would increase regulatory oversight over these traders.

Over the years many active cross-market proprietary trading firms have emerged, many of which engage in high-frequency trading. These firms generally rely on the broad proprietary trading exemption in rule 15b9-1 to forgo membership with, and therefore regulatory oversight by, FINRA. The rule change is specifically designed to require these high-frequency traders to become members of FINRA and submit to its review and oversight.

The proposed rule change amends Rule 15b9-1 of the Securities Exchange Act of 1934, as amended (“Exchange Act”) to narrow a current exemption from FINRA membership if the broker is a member of a national securities exchange, carries no customer accounts and has annual gross income of no more than $1,000 derived from sources other than the exchange to which they are a member. Currently, income

SEC Advisory Committee On Small And Emerging Companies Explores Venture Exchanges, Private And Secondary Securities Trading and The NASAA Coordinated Review Program- Part I

The SEC Advisory Committee on Small and Emerging Companies (the “Advisory Committee”) was organized by the SEC to provide advice on SEC rules, regulations and policies regarding “its mission of protecting investors, maintaining fair, orderly and efficient markets and facilitating capital formation” as related to “(i) capital raising by emerging privately held small businesses and publicly traded companies with less than $250 million in public market capitalization; (ii) trading in the securities of such businesses and companies; and (iii) public reporting and corporate governance requirements to which such businesses and companies are subject.”

As previously written about, on March 4, 2015, the committee met and finalized its recommendation to the SEC regarding the definition of “accredited investor.” My blog on those recommendations can be read HERE. In addition to finalizing the accredited investor definition recommendation, at the March 4 meeting the Advisory Committee listened to presentations regarding and discussed several important and timely small business initiatives.

I’ve had the

The New FINRA Broker Background Check Rule

On December 30, 2014, the SEC approved FINRA Rule 3110(e), which requires FINRA member firms to verify the information provided by or contained in a broker’s Form U-4 within 30 days of filing the form with FINRA. The Rule becomes effective on July 31, 2015. The Rule is intended to help verify background information on a broker, including publicly available information through the FINRA Broker-Check system and to prevent high-risk, recidivist brokers from moving from firm to firm and continuing questionable or outright improper conduct.

Background

One of FINRA’s 2015 Regulatory and Examination Priorities is addressing concerns about high-risk brokers and improving background checks and due diligence by member firms on prospective hires. The new Rule is part of FINRA’s initiative in this regard. FINRA is taking additional steps in this area as well, including a one-time background and financial check of all registered representatives, which checks will be completed by August 2015.

The SEC release discussing and approving the

SEC Supports FINRA’s Rule 6490 Authority Over Corporate Actions

In two recent administrative decisions, the SEC has upheld FINRA’s broad authority under Rule 6490 to approve and effectuate corporate actions by public companies trading on the OTC Markets. One of FINRA’s mandates is to protect investors and maintain fair and orderly markets and like broker-dealers, it acts as a gatekeeper in the small-cap industry. FINRA exercises its powers though the direct regulation of its member broker-dealer firms, but also through its Office of Fraud Detection and Market Intelligence, which monitors the trading activity and press releases of issues in the marketplace and conducts related investigations. FINRA works with the SEC as a front line in the detection, investigation and assistance with the prosecution of issuers.

Recently, through its power under Rule 6490, as more fully explained below, FINRA has, with the support of the SEC, expanded its impact on the small-cap marketplace by conducting in-depth reviews of issuers in conjunction with the processing of corporate actions, and denying such

SEC Suspends Trading On 128 OTC Markets Companies

On March 2, 2015, the Securities and Exchange Commission (SEC) suspended the trading in 128 dormant shell companies trading on the OTC Link. The SEC suspended the trading in these shell companies because of questions regarding the accuracy and adequacy of publicly disseminated information concerning the companies’ operating status, if any.

The SEC notes in its release that OTC Markets had been unable to contact each of the issuers for more than one year. None of the subject issuers had filed any information or updated with either OTC Markets or the SEC in over a year. The SEC staff then independently attempted to contact the issuers and was able to contact 10 of the 128 companies and confirm from those ten that they had either ceased operations or gone private.

The trading suspensions are part of an SEC initiative tabbed Operation Shell-Expel by the SEC’s Microcap Fraud Working Group. As part of the initiative, the SEC Enforcement Division’s Office of

FINRA Seeks to Eliminate the OTCBB and Impose Regulations on the OTC Markets

ABA Journal’s 10th Annual Blawg 100

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On October 7, 2014, the SEC published a release instituting proceedings to determine whether to approve FINRA’s request to delete the rules related to, and the operations of, the OTC Bulletin Board quotation service. On June 27, 2014, FINRA quietly filed a proposed rule change with the SEC seeking to adopt rules relating to the quotation requirements for OTC equity services and to delete the rules relating to the OTCBB and thus cease its operations. Although the rule filing was published in the Federal Register, it garnered no attention in the small cap marketplace. Only one comment letter, from OTC Market Group, Inc. (“OTC Markets”) (i.e., the entity that owns and operates the inter-dealer quotation system known by its OTC Pink, OTCQB and OTCQX quotation tiers) was submitted in response to the filing.

The OTCBB has become increasingly irrelevant in the OTC marketplace for years. In October 2010, I wrote a blog titled

The ECOS Matter; When Is A Reverse Split Effective?

ABA Journal’s 10th Annual Blawg 100

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In what was presumably an unintended consequence, the application of an SEC- approved FINRA regulation has resulted in a conflict between state and federal corporate law for a small publicly traded company.

On September 16, 2014, Ecolocap Solutions, Inc. (“ECOS”) filed a Form 8-K in which it disclosed that FINRA had refused to process its 1-for-2,000 reverse split. At the time of the FINRA refusal, ECOS had already received board and shareholder approval and had filed the necessary amended articles with the State of Nevada, legally effectuating the reverse split in accordance with state law. Moreover, ECOS is subject to the reporting requirements under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and had filed a preliminary and then definitive 14C information statement with the SEC, reporting the shareholder approval of the split.

The ECOS 8-K attached a copy of the FINRA denial letter, which can be viewed HERE.

FINRA Amends Rules 5110 and 5121 Related to Corporate Financing and Conflicts Of Interest

On April 28, 2014 and on May 7, 2014, the SEC approved the Financial Industry Regulatory Authority’s (FINRA) amendments to Rule 5110 (Corporate Financing Rule – Underwriting Terms and Arrangements) and 5121 (Public Offerings of Securities with Conflicts of Interest) in order to simplify and refine the scope of the rules. FINRA is the self-regulatory body that regulates and governs securities firms. All securities firms are required to be licensed broker-dealers and are required to be members of FINRA.

FINRA rules and regulations are subject to review and approval by the SEC. Section 15A of the Securities Exchange Act of 1934, as amended, requires that FINRA rules be “designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and in

What is A CUSIP and Legal Entity Identifier (LEI) Number?

CUSIP stands for Committee on Uniform Securities Identification Procedures. A CUSIP number identifies securities, specifically U.S. and Canadian registered stocks, and U.S. government and municipal bonds. The CUSIP system—owned by the American Bankers Association and operated by Standard & Poor’s—facilitates the clearing and settlement process of securities by giving each such security a unique identifying number.

The CUSIP number consists of a combination of nine characters, both letters and numbers, which act as individual coding for the security—uniquely identifying the company or issuer and the type of security. The first six characters identify the issuer and are alphabetical; the seventh and eighth characters, which can be alphabetical or numerical, identify the type of issue; and the last digit is used as a check digit. A CUSIP number changes with each change in the security, including splits and name changes.

Whereas CUSIP identifies securities, a Legal Entity Identifier (LEI) identifies issuers. An LEI is a new global standard identifier for

Will FINRA Rule Changes Related to Private Placement Further Deter Broker Dealers From Placing the Securities of Small Businesses?

On August 19, 2013, FINRA published Regulatory Notice 13-26 about the updated Private Placement Form that firms must file with FINRA when acting as a placement agent for the private placement of securities. A copy of the form is included with the regulatory notice at www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p325359.pdf. The Form went effective on July 1, 2013. FINRA has also updated the FAQs relating to the Private Placement Form. The updated Private Placement Form has six new questions:

Is this a contingency offering?
Does the issuer have

SEC Suspends Trading On 61 Shell Companies

The Securities and Exchange Commission (SEC) today suspended the trading in 61 dormant shell companies. The trading suspensions are part of an SEC initiative tabbed Operation Shell-Expel by the SEC’s Microcap Fraud Working Group. In May 2012, the SEC suspended the trading on 379 shell companies as part of the initiative. Each of the companies were dormant shells that were not current in public disclosures. Each of the companies failed to have adequate current public information available either through the news service on OTC Markets or filed with the SEC via EDGAR.

The federal securities laws allow the SEC to suspend trading in any stock for up to 10 business days. Once a company is suspended from trading, it cannot be quoted again until it provides updated information including complete disclosure of its business and accurate financial statements. In addition to providing the necessary information, to begin to trade again, a company must enlist a market maker to file a

Implementation Of The Elimination Of The Prohibition Against Advertising For Private Accredited Investor Offerings And The Crowdfunding Act, Continues To Be Delayed

The annual “SEC Speaks” conference, in which Securities and Exchange Commission (SEC) representatives review the agency’s efforts over the past year and preview the year to come, was held on February 22-23, 2013.

During the conference the SEC laid out the numerous items on its agenda for the year to come and beyond. The list included the careful implementation of the various titles of the JOBS Act, including Title II and Title III.

Title II of the JOBS Act provides that the SEC will amend Section 4(2) of the Securities Act of 1933 and Regulation D promulgated there under, to eliminate the prohibition on general solicitation and general advertising in a Rule 506 offering, so long as all purchasers in such offering are accredited investors. Although on August 29, 2012 the SEC published proposed rules implementing Title II, those rules have been met with numerous comments and opposition and it is entirely unclear how the SEC shall proceed.

New FINRA Rule 5123 Takes Effect Requiring Notice of Private Placements by Member Firms

The Financial Industry Regulatory Authority has adopted new Rule 5123 requiring members to file notice of their participation in private placements. The Rule took effect on December 3^rd 2012. The new rule does not contain a definition of “private placements” and accordingly is presumed to cover all private placements including those involving general solicitation and advertising under the new Rule 506(c) created by the JOBS Act.

Rule 5123 requires member firms to file a copy of the private placement memorandum, term sheet or other disclosure document with FINRA, for all offering in which they sell securities, within 15 calendar days of the first sale.

FINRA enacted the rule in an effort to further police the private placement market and to ensure that members participating in these private offerings conduct sufficient due diligence on the securities and its issuer

In filings with the SEC, FINRA expressed its position that Rule 5123 is consistent with the JOBS Act in

CROWDFUNDING FROM A TO Z

As the expected deadline for the SEC to publish rules and regulations enacting the Crowdfunding Act (Title III of the Jumpstart Our Business Startups Act (JOBS Act)) grows nearer, it is a good time for a complete overview of crowdfunding. New Sections 4(6) and 4A of the Securities Act of 1933 codify the crowdfunding exemption and its various requirements as to Issuers and intermediaries. The SEC is in the process of drafting the underlying rules and regulations which will implement these new statutory provisions.

A. WHAT IS CROWDFUNDING?

The Crowdfunding Act amends Section 4 of the Securities Act of 1933 (the Securities Act) to create a new exemption to the registration requirements of Section 5 of the Securities Act. The new exemption allows Issuers to solicit “crowds” to sell up to $1 million in securities as long as no individual investment exceeds certain threshold amounts.

The threshold amount sold to any single investor cannot exceed (a) the greater of $2,000

FINRA Seeks Public Comment in Advance of Crowdfunding Rulemaking

The Financial Industry Regulatory Authority (FINRA) has requested public comment and input in advance of preparing and publishing proposed rules related to the Crowdfunding Act. The scope of the FINRA rules will be written specifically for registered funding portals and although they will need to be complementary to the SEC rules, it is intended that they not be duplicative. FINRA has set August 31, 2012 as the deadline for receiving comments.

As Related to Registered Funding Portals

Section 302 of the Crowdfunding Act requires that all Crowdfunding offerings be conducted through an intermediary that is a broker dealer or funding portal that is registered with the SEC. Section 304 of the Crowdfunding Act provides that Funding Portals are exempt from the broker dealer registration requirements, as long as they are registered with the SEC as Funding Portals and follow all such registration and ongoing rule and reporting requirements. In accordance with Section 304, Funding Portals must be “subject

Crowdfunding Intermediaries – SEC Issues Guidance

On April 5, 2012 President Obama signed the JOBS Act into law. Part of the JOBS Act is the Crowdfunding Act, the full title of which is the “Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act of 2012”. The SEC has been mandated with the task of drafting the crowdfunding rules and regulations by early 2013. In addition to fashioning the exemption that will allow companies to raise funds using the Crowdfunding Act, the SEC must also fashion rules to govern the crowdfunding intermediaries that companies will be required to use in the process.

Crowdfunding Intermediaries or Funding portals (the terms are interchangeable) are hurrying up to be ready to implement rules that will be enacted in early 2013 while at the same time, waiting to find out what those rules will be. On May 7, 2012, the SEC issued limited guidance for crowdfunding intermediaries. As has been the case since enactment of the JOBS Act,

SEC Suspends Trading for Record Number of Shell Companies

The Securities and Exchange Commission (SEC) today suspended the trading in 379 dormant shell companies. This is the most trading suspensions in a single day in the history of the SEC. The trading suspensions are part of an SEC initiative tabbed Operation Shell-Expel by the SEC’s Microcap Fraud Working Group. Each of the companies was a dormant shell that was lacking any and all public disclosures. That is, each of the companies failed to have adequate current public information available either through the news service on OTC Markets or filed with the SEC via EDGAR.

Crowdfunding intermediaries- Hurry Up and Wait

I have been blogging extensively on the JOBS Act and Crowdfunding Act. My last blog addressed Herculean effort the SEC must undertake to write the laws and rules which will bring the Crowdfunding Act to fruition by early 2013. In addition to fashioning the exemption that will allow companies to raise funds using the Crowdfunding Act, the SEC must also fashion rules to govern the funding portals that companies will be required to use in the process.

Funding Portals are popping up everywhere, at least in name and concept. All of these portals are busy putting together systems internally, but all of those systems are subject to the SEC

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