Emerging Markets Law

Showing 5 posts from July 2013.

Effective Date for SEC Regulation D Amendments

The SEC today published in the Federal Register its official announcements of the new rules eliminating the ban on general solicitation for Regulation D offerings and adopting new "bad actor" disqualification rules for certain Regulation D offerings.

Our firm recently published a Law Alert analyzing these changes in the rules governing private placements under Regulation D.

The new rules will be effective September 23, 2013.

SEC Adopts Rules under Title II of JOBS Act

Posted In Crowdfunding

The SEC yesterday adopted proposed rules that would implement Title II of the JOBS Act and implement significant changes in the way entrepreneurs and small businesses raise capital in private equity transactions.

Among other things the new rules:

  • Lift the ban on general solicitation of investors in Regulation D offerings;

Modify the rules regarding when amendments must be filed to an issuer's Form D information statement;

Require written general solicitation materials used in a Rule 506(c) offering to include certain legends and other disclosures;

Require the submission of written general solicitation materials used in Rule 506(c) offerings to the SEC; and

Adopt "bad boy" disqualification rules that would bar an issuer from relying on Rule 506 for one year if the issuer, or any predecessor or affiliate of the issuer, did not comply with the Form D filing requirements in a Rule 506 offering during the preceding five years.

Practitioners are still digesting the SEC's 185-page document but this appears to presage the SEC's action on crowdfunding and other changes involving private equity under the JOBS Act.

SEC Announces Meeting to Adopt Title II Rules under JOBS Act

Posted In Crowdfunding

The SEC has announced that it will hold a meeting on July 10, 2013 to:

  • Consider whether to adopt amendments to eliminate the prohibition against general solicitation and general advertising in certain securities offerings conducted pursuant to Rule 506 of Regulation D under the Securities Act and Rule 144A under the Securities Act, as mandated by Section 201(a) of the Jumpstart Our Business Startups Act;
  • Consider whether to propose amendments to Regulation D, Form D and Rule 156 under the Securities Act. The proposed amendments are intended to enhance the Commission's ability to evaluate changes in the market and to address the development of practices in Rule 506 offerings; and
  • Consider whether to adopt amendments to disqualify securities offerings involving certain "felons and other 'bad actors'" from reliance on the exemption from Securities Act registration pursuant to Rule 506 as mandated by Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

These proposed rules implement Title II  of the JOBS Act and would move forward the implementation of the Dodd-Frank Act but would not implement securities-based crowdfunding (as that would requirement the implementation of rules under Title III of the JOBS Act).

In a related development, FINRA has announced that it will consider adopting rules to govern crowdfunding portals as contemplated by the JOBS Act.  FINRA will likely be the "self-regulatory organization" (or "SRO") selected by the SEC to govern crowdfunding portals as required by Title III of the JOBS Act.  FINRA's action to adopt rules also represents a step forward towards the implementation of securities-based crowdfunding.

Ten Tips for a Crowdfunding Campaign: Insights from Entrepreneurs Who Failed

Posted In Crowdfunding

Here's a great article with tips for crowdfunders. (Hat tip: Kent Webb from Taylor English Duma).

Interstate crowdfunding in the U.S. is still stalled due to SEC foot-dragging but intrastate crowdfunding is still possible in Georgia and a handful of other states.

SEC Nominees Said to Push for Completion of Dodd-Frank and JOBS Act Regulations

Posted In Crowdfunding

Bloomberg is reporting that two nominees to the Securities and Exchange Commission are both vowing to swiftly conclude pending rule-makings under Dodd-Frank and the 2012 JOBS Act.

Kara M. Stein, a Democrat, and Michael Piwowar, a Republican, told the Senate Banking Committee the SEC must complete the required rulemaking, notwithstanding other priorities.

"We need to pursue all of those things at one time," said Stein, a former policy aide to Senator Jack Reed of Rhode Island.

Stein and Piwowar would join the SEC as it adapts to a new agenda under Chairman Mary Jo White, who says the agency's rulemaking priorities are prescribed by the Dodd-Frank Act of 2010 and the Jumpstart Our Business Startups Act of 2012.

Regulations under the JOBS Act would allow allow equity crowdfunding and advertising for investors by hedge funds. The absence of regulations due to SEC inaction to date has effectively stalled implementation of the law.

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