Category Archives: Securities Law

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SEC Adopts Rule Amendments Aimed at Expanding Access to Capital

Photo of Richard A. FriedmanPhoto of Brett Uslaner*By Richard A. Friedman and Brett Uslaner* on Posted in Securities Law
On November 2, 2020, the Securities and Exchange Commission adopted amendments intended to ease the rules for certain exempt offerings. These changes include increasing the annual cap on equity crowdfunding from $1.07 million to $5 million, raising the annual cap on Reg A+ offerings from $50% million to $75 million, raising the maximum offering amount … Continue Reading

Issues Regarding SEC Proposal to Expand Private Offering Exemptions

Photo of John HempillPhoto of Karl BuhlerBy John Hempill and Karl Buhler on Posted in Securities Law
The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), was promoted as a new piece of legislation creating groundbreaking additional pathways to funding for companies, which was especially highlighted by the 2008 financial crisis.  Two provisions in the JOBS Act, created “Regulation” crowdfunding and “Reg A+” offerings, were particularly focused on early stage … Continue Reading

With the SEC, Cooperation is Key

Photo of Andrea CataneoPhoto of Winnie WeilBy Andrea Cataneo and Winnie Weil on Posted in Securities Law
As an expensive “slap on the wrist,” the Securities and Exchange Commission (“SEC” or the “Commission”) recently concluded that approximately $12.7 million worth of funds raised in a 2017 Initial Coin Offering (“ICO”) by Gladius Network LLC (“Gladius”) were part of an unregistered securities offering, and all proceeds must be returned to investors. However, the … Continue Reading

SEC Expands the Definition of “Smaller Reporting Company”

Photo of Jeffrey FesslerPhoto of Robert Wernli, Jr.Photo of Nazia KhanBy Jeffrey Fessler, Robert Wernli, Jr. and Nazia Khan on Posted in Securities Law
This article was originally posted to the Corporate and Securities Law Blog on July 12, 2018. On June 28, 2018, the U.S. Securities and Exchange Commission (the “SEC”) adopted amendments to the definition of “smaller reporting company” which expand the number of companies that qualify as smaller reporting companies and can thereby take advantage of … Continue Reading

New Law Requires SEC to Expand Regulation A+ To Exchange Act Reporting Companies

Photo of Robert Wernli, Jr.Photo of Jeffrey FesslerPhoto of Alexander YarbroughBy Robert Wernli, Jr., Jeffrey Fessler and Alexander Yarbrough on Posted in Securities Law
On May 24, 2018, President Donald J. Trump signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Act”). The Act, which primarily focuses on rolling back certain regulatory provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, also contained a significant change in the law for companies … Continue Reading

Crypto-Crime: The SEC and DOJ Go After BitFunder and Its BitFounder

Photo of Jonathan E. MeyerBy Jonathan E. Meyer on Posted in Blockchain, Compliance, Disclosure, Securities Law
Taking further steps into the world of cryptocurrency, two entities of the federal government recently took legal action against BitFunder, a now-defunct Bitcoin exchange, and its founder, Jon Montroll. The Securities and Exchange Commission filed civil charges against BitFunder and Montroll, and the U.S. Attorney’s Office in Manhattan brought criminal charges of perjury and obstruction … Continue Reading

When Does Software Become Securities?

By Sheppard Mullin on Posted in Blockchain, Securities Law
The SEC Munchee Order and Chairman’s Statement On December 11, 2017, the U.S Securities and Exchange Commission (“SEC”) issued a cease and desist order (“Order”) against Munchee, Inc.’s (“Munchee”) $15 million Initial Coin Offering (“ICO”). The SEC determined that the tokens were investment contracts, and thus securities, primarily because a purchaser of the tokens would have … Continue Reading

At Last! Relaxation of Federal Securities Regulations for Private Company Stock Incentive Awards may be on the Horizon

Photo of Gregory SchickBy Gregory Schick on Posted in Disclosure, Securities Law
Many privately held companies rely on equity compensation awards (typically stock options) to recruit, retain and motivate key employees and other service providers.  The issuance of such equity compensation awards generally needs to comply with, among other things, federal securities laws.  Most commonly, private company issuers of equity compensation awards rely on federal Rule 701 … Continue Reading

The SEC and ICOs: Putting the SEC’s Determination that DAO Tokens are Securities in Context

By Sheppard Mullin on Posted in Blockchain, Securities Law
On July 25, 2017, the U.S. Securities and Exchange Commission (“SEC”) issued a report (“Report”) detailing its investigation into whether the DAO (an unincorporated “decentralized autonomous organization”), Slock.it UG (“Slock.it”), Slock.it’s co-founders, and intermediaries violated the federal securities laws. The SEC determined that the tokens issued by the DAO are securities under the Securities Act of 1933 (“Securities … Continue Reading

SEC Prevails in Regulation A+ Litigation

Photo of John HempillPhoto of Kevin RoganBy John Hempill and Kevin Rogan on Posted in Securities Law
Regulation A+, which became effective on March 25, 2015, permits the offering of up to $50,000,000 in securities in any twelve-month period, subject to the certain requirements (a “Tier 2 Offering”).  Tier 2 Offerings are not subject to state securities laws registration and qualification requirements due to federal preemption provided by Section 18 of the … Continue Reading

S.E.C. Adopts Final Rules Amending Regulation A

Photo of John HempillBy John Hempill on Posted in Securities Law
On March 25, 2015, the Securities and Exchange Commission adopted final rules amending its Regulation A, i.e., the so-called “Regulation A+ Rules”. Regulation A has been a little used provision in the securities laws due to, among other shortcomings, the limit on offering size to $5 million in any 12-month period and the requirement that … Continue Reading

Toward a Transactional Exemption for Emerging Company Investments

Photo of John HempillBy John Hempill on Posted in Securities Law
In “Bringing the Individual Accredited Investor Definition into the 21st Century,” which was posted on December 18th of last year, it was suggested that there might be certain common venture capital transactional structures that  provide protections that could justify eliminating the additional disclosures and limitations required when non-accredited investors participate in an offering under Regulation D.  … Continue Reading

Setting The Record Straight On The New General Solicitation Rules

Photo of John HempillPhoto of John TishlerBy John Hempill and John Tishler on Posted in Corporate Governance, Securities Law
On September 23, 2013, the final rules eliminating the prohibition on general solicitation and advertising for certain offerings under Rule 506 went into effect.  While this development was anticipated with much excitement by the angel and venture capital communities, the final rules have created some uncertainty.  In this blog post, we address some of the … Continue Reading

Rules Eliminating the Prohibition on General Solicitation for Rule 506 and Rule 144A Offerings Become Effective September 23, 2013

Photo of John TishlerBy John Tishler on Posted in Securities Law
The final rules for eliminating the prohibition against general solicitation and general advertising in Rule 506 and Rule 144A offerings will become effective on September 23, 2013, which is 60 days after the July 24, 2013 date they were published in the Federal Register. The rules prohibiting certain “bad actors” from participating in securities offerings … Continue Reading
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