Posts Categorized: Private Securities Offerings

SEC Proposes New Rules on “Finders”

On October 7, 2020, the Securities and Exchange Commission proposed rules to exempt for the first time “finders” from the need to register as broker-dealers. For a number of years, attorneys have advised that issuers could use “finders” not registered as broker-dealers to find potential investors on capital raises if the finders kept their activities very… Read more »

SEC Approves Update of “Accredited Investor” and “Qualified Institutional Buyer” Definitions

On August 26, 2020, the Securities and Exchange Commission (the “SEC”) voted 3-2 to adopt its proposed revisions to expand the definition of “accredited investor” (“AI”) and “qualified institutional buyer” (“QIB”), which marked the first major revision since 1982.  The revisions included:  (i)  the new definition of AI allows an individual who holds certain professional… Read more »

SEC Proposes Revisions to Exempt Offering Rules

On March 4, 2020, the Securities and Exchange Commission (the “SEC”) issued a proposal to revise the exempt offering rules under Regulation D (exempt offerings) and Regulation S (offshore offerings) of the Securities Act of 1933 largely to make it easier to conduct such offerings.  The proposals include, among other things: While Rule 506(c) under… Read more »

FINRA Proposes to Expand “Capital Acquisition Broker” Rules

On January 30, 2020, the Financial Industry Regulatory Authority (“FINRA”) proposed amendments to its “capital acquisition broker” rules (the “CAB Rules”) to broaden the coverage of the rules.  The CAB Rules were adopted in 2016 to allow a broker-dealer to comply with a lesser set of requirements if it is engaged in a limited set… Read more »

SEC Proposes Revisions to “Accredited Investor” and “Qualified Institutional Buyer”

Among the key thresholds under Regulation D and Rule144A for eligibility for investing in private securities offerings are the definitions of “accredited investor” and “qualified institutional buyer”.  In mid-December of 2019, the Securities and Exchange Commission approved, by a vote of 3-2, a proposal to revise these definitions.  The current categories and financial thresholds remain… Read more »

SEC Issues Cease and Desist Against Prosper for Overstating “Annualized Net Returns”

On April 19, 2019, the Securities and Exchange Commission (the “SEC”) issued a Cease and Desist Order against Prosper Funding, LLC (“Prosper”), for overstating “Annualized Net Returns” to its investors for nearly two years. Prosper is an on-line lender which raises funds by selling securities linked to the performance of consumer loans and related rights. … Read more »

SEC Acts Against Cryptocurrency Companies

On October 11, 2018, Securities and Exchange Commission (the “SEC”), the SEC issued a press release announcing that it had obtained an emergency court order to stop an Initial Coin Offering (an “ICO”) by Blockvest LLC and its founder, Reginald Buddy Ringgold, III. Among other things, the company claimed that the ICO had been approved by the… Read more »

SEC Report on Virtual Token Offerings and ICOs

On July 25, 2017, the Securities and Exchange Commission (the “SEC”) Division of Enforcement released a Report of Investigation (the “Report”) and a press release on the securities law analysis of an offer of DAO virtual tokens (“DAO Tokens”).  (Such an offer is sometimes called an Initial Coin Offering, or “ICO”.)  The Report may be the first of this type of report… Read more »

FINRA Issues Letter Guidance On Use of Performance Information with Institutional Investors

On June 9, 2017, the Financial Industry Regulatory Authority (“FINRA”) issued a letter (the “Letter”) giving guidance in response to a request by an open-ended fund to allow it to provide “Related Performance Information” in marketing material used with institutional investors. “Related Performance Information” is defined as the actual performance of separate or private accounts or funds… Read more »

SEC Approves Intrastate Offerings and Increasing the Rule 504 Cap

The Securities and Exchange Commission (the “SEC”) approved, on October 26, 2016, amendments to its Securities Act of 1933 (the “Securities Act”) Rule 147 and the creation of Rule 147A, amendments to its Rule 504, and the repeal of the limited use Rule 505.  See press release, here.  The final rules apparently largely follow the… Read more »