Your Business Deserves To Thrive
Disclosure Requirements. Under the final rules, an issuer must file with the SEC and provide to the relevant intermediary and investors a Form C: Offering Statement, prior to the commencement of the offering of securities and amend the same to disclose any material changes, additions or updates.[1] The final rules set forth information that needs to be included in Form…
On October 30, 2015, the Securities and Exchange Commission (“SEC”) finally voted to adopt the final rules to implement Title III of the JOBS Act, popularly known as the “CROWDFUND Act (Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act of 2012)” (In this blog, we will just call it the Act.). See our previous blogs titled “SEC Votes…
Intrastate Exemption. We briefly touched on the concept of intrastate exemption in our previous blog series on crowdfunding (available here). As the name suggests, intrastate offerings are transactions that do not involve interstate commerce (hence the exemption, as being outside of the scope of the Securities Act of 1933). This is important because, to qualify for the intrastate offering exemption…
General Solicitation. As we discussed in our previous blog series on exempt offerings (available here), absence of general solicitation is a condition to be met in most exempt offerings, with limited exceptions, such as offering under Rule 506(c). This is important because, to qualify for an exemption from registration, an issuer must meet all the requirements of the exemption. General…
Verification of Accredited Investor Status. The next set of questions are related to the requirement under Rule 506(c) that an issuer take reasonable steps to verify, and form a reasonable belief regarding, the accredited investor status of a purchaser at the time of the sale of securities.[1] This is important because, to qualify for an exemption from registration, an issuer…
On August 6, 2015, the Securities and Exchange Commission (“SEC”) issued Compliance and Disclosure Interpretations (“C&DIs”). For the full text of the C&DIs, click here. C&DIs are not rules, regulations, or statements of the SEC, but reflect the current views of the staff of the agency, which should be of interest to many businesses that want to raise capital through…
Regulation D, Rule 506 As you can see, the overwhelming popularity of Rule 506 is largely the result of preemption of state securities laws. In fact, an analysis of Regulation D offerings based on approximately 27,000 Form Ds filed between September 15, 2008 and October 18, 2010 shows that even transactions with smaller offering amounts, for which Rule 504 or…
Regulation D, Rule 505 Rule 505 of Regulation D provides an exemption for offerings up to $5,000,000 in a 12-month period.[1] This exemption is not available to investment companies[2] or the so-called “bad actors.”[3] Just like in Rule 504 offerings, a company cannot use general solicitation or advertising to sell the securities in Rule 505 offerings.[4] And just like in…
An Overview of Exemptions In our previous posts on exempt offerings and crowdfunding, we discussed some of the most commonly used exemptions from the registration requirements of the federal securities laws, including Regulation A and Rule 506(b) under Regulation D, as well as the new and pending exemptions under the JOBS Act, including Rule 506(c), Regulation A+, and the CROWDFUND…
In our previous posts on Eureeca Capital (available here and here), we looked at Eureeca’s ill-fated attempt to operate a crowdfunding platform in the U.S. as a cautionary tale on how not to conduct an exempt offering.[1] We mentioned that, in anticipation of the institution of the SEC proceedings, Eureeca undertook voluntary remedial actions and submitted an offer of settlement…