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Tagged Posts: accredited investor’

An Example of How Securities Laws Can Be Broader than Most People Think: SEC Warns Investors of Fantasy Stock Trading Websites (Part 1)

November 10, 2015

On June 17, 2015, the Securities and Exchange Commission (“SEC”) issued an investor alert to warn investors about fantasy stock trading and other similar websites. For a full text of the alert, click here.

Although most people think that terms like “swap,” “security-based swap,” and “derivative” include only complicated financial instruments used by sophisticated financial institutions, the SEC explains that these terms are defined broadly and include any agreement, contract, or transaction whose value is based upon – or “derivative” of – the value or performance of some other financial product, event, or characteristic.… Read the rest

More Clarification on How To Raise Money Without Registration: SEC Issues Compliance and Disclosure Interpretations on Exempt Offerings (Part 3)

November 5, 2015

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 solicitation includes, without limitation, any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio,[1] as well as other uses of publicly available media, such as unrestricted Web sites.… Read the rest

More Clarification on How To Raise Money Without Registration: SEC Issues Compliance and Disclosure Interpretations on Exempt Offerings (Part 2)

October 31, 2015

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 must meet all the terms and conditions of the exemption, and verification of accredited investor status is a requirement under Rule 506(c).… Read the rest

More Clarification on How To Raise Money Without Registration: SEC Issues Compliance and Disclosure Interpretations on Exempt Offerings (Part 1)

October 27, 2015

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 exempt offerings. The recent C&DIs deal with a multitude of issues, through questions and answers, but in this blog series, we will focus on three topics that are particularly relevant: accredited investor status, general solicitation, and intrastate exemption.… Read the rest

Update on Eureeca Capital

August 11, 2015

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 to the agency, including civil penalties of $25,000, which the SEC determined to accept.  We also mentioned that Eureeca’s website now features a prominent disclaimer and information page that provides information about what constitutes “U.S.… Read the rest

An Easy Way for Texas Companies To Raise Money? A Discussion of the Texas Crowdfunding Exemption (Part 5)

January 5, 2015

Texas Crowdfunding Portal Registration and Activities (in Detail).

Simplified/Streamlined Registration Process. The simplified registration process for TCPs, which we discussed previously, is designed so that TCPs are subject to fewer regulatory requirements than general securities dealers, because they are limited in what they can do.[1]

No Investment Advice. Of note, a TCP is prohibited from offering investment advice or recommendations, so in listing issuers on its platform, it is important for the TCP not to provide an implicit endorsement or recommendation.… Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.