Regulation A Expanded to Allow Offerings by Exchange Act Reporting Companies
Deviating from its standard rulemaking procedures, the SEC issued final rules on December 19, 2018 to expand the eligibility requirements under Regulation A to include Exchange Act Reporting companies. This action was required by Congress as part of the “Economic Growth Act” that became law in May 2018. The SEC determined that it had little […]
Broker-dealers, funding portals, and FINRA’s 2018 examination findings
On December 7, 2018, FINRA released its 2018 Report on Examination Findings. This is the second annual report FINRA has released, and it provides a wealth of information for compliance officers. FINRA notes that it is not an exhaustive review of deficiencies exhibited by broker-dealers, but it does highlight those deficiencies that were significant and frequent. While […]
Compliance with Reg CF: Are you required to include financial statements of a predecessor or an acquisition target?
Often, companies are started with just an idea. A founder may decide to quickly form a limited liability company to help protect assets, or operate as a sole proprietor for a period of time. Prior to taking on funds from outside investors, that company may decide to form a corporation. For companies that follow that […]
Upcoming Changes to Regulation A
With the approval by the House of Representatives of the Senate version of S. 2155, a number of financial regulatory reform measures were sent to the President’s desk for signature and became law on May 24. While some of these measures, especially those related to banking, are more controversial, there are a few provisions related to […]
Compliance with Reg CF: When failure becomes fraud
As previously identified in a CrowdCheck investor alert here, a significant number of companies that have raised funds under Regulation Crowdfunding are no longer in business. That is to be expected. Early stage companies have a high rate of failure, and investors should understand that risk before investing. It is a general principle that a business […]
Compliance with Reg CF: Don’t forget your state notice filings
While Section 4(a)(6) of the Securities Act and Reg CF preempt state regulation of offerings under Reg CF, states are still permitted to require notice filings be made. For Reg CF, rather than all 50 states plus the District of Columbia and other territories being able to require notice filings, only the state of the […]
When it comes to securities law, “pre-sales” of ICOs are still sales
Following the release of the “Simple Agreement for Future Tokens” or “SAFT” documentation by Protocol Labs and Cooley LLP, the possibility of doing blockchain token sales has been expanded to companies at even earlier stages of development. When selling a token, companies needed to have more architecture developed with respect to their platforms so that they […]
Compliance with Reg CF: Is your accountant “independent”?
Every company offering securities to investors under Regulation Crowdfunding (“Reg CF”) is required to provide financial statements that are prepared in accordance with generally accepted accounting principles. For offerings seeking over $107,000, those financial statements are required to be reviewed by an independent public accountant (second helpings under Reg CF may require financial statements audited […]
Recent update to the CrowdCheck Issuer-Dealer Memo
Our memo regarding issuer-dealer registration for companies considering an offering under Tier 2 of Regulation A has been updated with the inclusion of Nebraska following recent pronouncements from its Department of Banking and Finance. The updated memo can be obtained here, http://13.221.220.68/sites/default/files/Reg%20A%20Issuer-Dealer%….
Compliance with Reg CF: What if you need money during the middle of Reg CF campaign?
So far, Regulation Crowdfunding appears to be doing what it was always intended to do. Small businesses are able to raise funds to begin or expand their business operations. Some companies could be categorized as innovative growth companies, others more main street. In any case, a common theme is that issuers are in need of […]