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Tagged Posts: exemption’

Definition of Accredited Investor To Be Expanded? (Part III)

November 21, 2016

On February 1, 2016, the House of Representatives passed H.R. 2187, titled “Fair Investment Opportunities for Professional Experts Act.”[1]  The bill, whose stated purpose is to direct the SEC to revise its regulations regarding the qualifications of natural persons as accredited investors, seeks to expand the definition of accredited investor.  Specifically, the bill proposes to add non-financial measures of sophistication to include the following persons in the pool of accredited investors: (i) any natural person who is currently licensed or registered as a broker or investment adviser by the SEC, FINRA, or any similar self-regulatory organization, or the securities division of a state responsible for licensing or registration of individuals in connection with securities activities; and (ii) anyone the SEC determines, by regulation, to have demonstrable education or job experience to qualify such person as having professional knowledge of a subject related to a particular investment and whose education or job experience is verified by FINRA or any similar self-regulatory organization. … Read the rest

Definition of Accredited Investor To Be Expanded? (Part II)

November 10, 2016

In our last post, we looked at the recent recommendations by the Securities and Exchange Commission’s (“SEC”) Advisory Committee on Small and Emerging Companies (the “Committee”) to expand the definition accredited investor.[1]  For those who are familiar with the Committee’s activities, this was not the first time it recommended expanding the definition of accredited investor.  In March 2015, for example, the Committee recommended that any modifications to the definition should have the effect of expanding, not contracting, the pool of accredited investors.… Read the rest

Definition of Accredited Investor To Be Expanded? (Part I)

November 8, 2016

In our previous blog post Raising Capital Through Exempt Offerings, we talked about some of the most commonly used exemptions for securities offerings.  Of note, we mentioned that Rule 506 promulgated under Regulation D is the most widely used transactional exemption for securities offerings, used in more than 90% of all exempt offerings in the United States.[1]  To understand how exemptions under Regulation D work, it is important to understand the concept of “accredited investor,” as it is often embedded in the conditions of such exemptions. … Read the rest

Securities Fraud Class Action Lawsuit Trends

October 25, 2016

When we write about securities law issues here, we tend to focus on enforcement actions or investor alerts by the Securities and Exchange Commission (SEC).  For instance, in our previous blog series “SEC Issues an Investor Alert on Social Media and Investing,” we discussed the SEC investor alert warning investors about fraudsters who attempt to manipulate share prices through social media.  In another blog post “Crowdfunding Gone Wrong: Some Points of Caution,” we covered the SEC’s emergency action against Ascenergy LLC, a Nevada limited liability company, which allegedly solicited investors on crowdfunding websites with false and misleading statements. … Read the rest

When Do You Need Securities Law Advice?

September 13, 2016

Startups and early-stage companies often ask us when they need securities law advice (other than when obviously dealing with securities).  Our answer is: as soon as you start thinking about raising capital or bringing in investors.  Here’s why.

Under the federal securities laws, a company may not offer or sell securities unless the offering has been registered with the SEC or an exemption from registration is available.  The legal definition of “security” is extremely broad and includes, among other things:

“any note, stock, treasury stock, security future, security-based swap, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, .… Read the rest

Shawn McBride Featured in a Huffington Post Article on Crowdfunding

July 12, 2016

On June 23, 2016, Shawn McBride was featured in a Huffington Post article titled “What the New Equity Crowdfunding Rules Mean for Business Owners and Investors.”  This article is based on the podcast interview with Deirdre Sanborn of The Ambition Project Show on the same subject, which we blogged about just this past week (here).

The Huffington Post article focuses on the implications of the new federal crowdfunding rules, which became effective as of May 16, 2016, mainly for business owners. … Read the rest

Federal Crowdfunding Goes into Effect on May 16, 2016 (Part VI)

June 14, 2016

Fix Crowdfunding Act.  

We have been blogging about federal crowdfunding in this blog series this past month or so. As you know, Title III of the JOBS Act, also referred to as the “CROWDFUND Act (Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act of 2012),” exempts up to $1 million crowdfunded securities from the federal registration requirement when the transaction is conducted in certain ways.[1] For a detailed analysis of the final rules, please see our previous blog series “Is It Time To Do Crowdfunding To Raise Money?: SEC Releases Federal Crowdfunding Final Rules.” Even before the final rules went into effect, however, efforts to amend Title III had been underway.… Read the rest

Federal Crowdfunding Goes into Effect on May 16, 2016 (Part V)

June 7, 2016

SEC Small Entity Compliance Guide and Compliance and Disclosure Interpretations for Issuers.

On May 13, 2016, the Securities and Exchange Commission (“SEC”) released two guidance documents on crowdfunding for issuers: “Regulation Crowdfunding: A Small Entity Compliance Guide for Issuers” and “Regulation Crowdfunding: Compliance and Disclosure Interpretations (C&DIs).” [1]  For details of the final rules, including requirements for issuers, please see our previous blog series “Is It Time To Do Crowdfunding To Raise Money?: SEC Releases Federal Crowdfunding Final Rules.” The compliance guide and C&DIs explain the final rules in plain English, some of which we highlight below.… 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.