In the first SEC enforcement action of its kind, the SEC announced on February 8, 2013 that it had filed civil charges against, and received an emergency order to freeze assets of, the Intercontinental Regional Center Trust of Chicago, a designated Regional Center under the EB-5 Immigrant Investor Program administered by U.S. Citizenship and Immigration Services (USCIS), and the Regional Center’s principal. See full complaint here.


Continue Reading SEC Freezes Assets and Brings Civil Charges against EB-5 Investor Visa Project

By Jason Schendel and Joel Cazares

A new rule requiring FINRA member firms to file copies of certain offering documents related to private placement transactions was approved by the SEC and was effective as of December 3, 2012. FINRA has published FAQs regarding the new rule which can be found here.


Continue Reading FINRA Adopts Rule 5123 Requiring the Filing of Offering Documents used in Private Placements of Securities

At an open meeting held on August 29, 2012, the Securities and Exchange Commission approved a proposed rule pursuant to Section 201(a) of the Jumpstart Our Business Startups (“JOBS”) Act that would amend:

  • Regulation D and Rule 506 under the Securities Act to remove the ban on general solicitation and general advertising for offerings sold only to accredited investors
  • Rule 144A to permit offerings to persons other than qualified institutional buyers, including by means of general solicitation or general advertising, provided the securities are sold only to persons that the seller and any person acting on behalf of the seller reasonably believe are qualified institutional buyers


Continue Reading At Long Last, A Divided SEC Publishes Proposals To Enable General Solicitation And Advertising For Regulation D And Rule 144A, But Further Delays Effectiveness

In recent weeks, the SEC has given notice of matters that SEC Commissioners will consider at an open meeting on August 22, 2012, including:

  • general solicitation rulemaking required by Title II of the JOBS Act
  • disclosure and reporting rules for conflict minerals and resource extraction issuers that are required under the Dodd-Frank Wall Street Reform and Consumer Protection Act

SEC Chairman Mary Schapiro also recently testified before a House Oversight and Government Reform Committee about the SEC’s progress in implementing rules and providing studies and reports to Congress required under the Jumpstart Our Business Startups (JOBS) Act.


Continue Reading Update on Timeline for SEC Rulemaking to Implement the JOBS Act and Dodd-Frank Act

On April 5, 2012, President Obama signed the Jumpstart Our Business Startups (JOBS) Act, enacting it into law. The JOBS Act is intended to make it easier for smaller and earlier stage companies to raise capital and also to revitalize the U.S. market for initial public offerings, which has been in decline since the beginning of the last decade.

The provisions of the JOBS Act represent a watershed change to the laws and regulations governing capital raising for private companies. Some of the provisions – such as the “IPO on-ramp” provisions and the increase in the number of holders triggering mandatory registration and public reporting under the Securities Exchange Act of 1934, are effective immediately. Others, including the new crowdfunding exemption, the removal of the ban on general solicitation for offerings under Rule 506 to accredited investors and Rule 144A to QIBs, and the new exemption modeled on Regulation A, will require SEC rulemaking before they come into force.

We have previously blogged about the original House version of the Act and the changes the Senate adopted, which changes were enacted into law. This article discusses the full Act as enacted.


Continue Reading President Obama Signs JOBS Act: Landmark Reform for Small and Emerging Growth Companies Now Law

On March 26, 2012, the House of Representatives passed the version of the Jumpstart Our Business Startups (JOBS) Act that was approved by the Senate on March 22, 2012. The House vote was 380-41. President Obama is expected to sign the bill this week. We discussed the JOBS Act and the Senate’s modifications to the crowdfunding provisions of the JOBS Act here and here.


Continue Reading House Passes Modified JOBS Act and sends to President Obama – Expected to Become Law this Week

On March 22, 2012, the Senate passed the Jumpstart Our Business Startups (JOBS) Act by a vote of 73-26. The House of Representatives passed the JOBS Act on March 8, 2012 by a vote of 390-23. The Senate bypassed its typical committee process to rush the bill to a floor vote. Legislators in both parties and the President have adopted the JOBS Act as an election-year demonstration of their commitment to small businesses and entrepreneurialism, and they have paid little heed to strongly-worded opposition from SEC Chairman Mary Schapiro, state regulators and organizations ranging from the Council for Institutional Investors to the AARP.


Continue Reading Senate Passes Modified JOBS Act – Regulatory Reform for Small and Emerging Growth Companies Speeds Closer to Fruition

Building on months of momentum in Congress, on March 8, 2012, the U.S. House of Representatives passed the Jumpstart Our Business Startups (JOBS) Act by a bi-partisan vote of 390-23. A similar bill, S. 1933, has been introduced in the Senate and may be voted on this month. The JOBS Act is intended to address the sharp decline in U.S. public offerings during the last decade and to facilitate capital raising by smaller companies. The provisions of the JOBS Act will, if enacted, represent a watershed change to the laws and regulations governing capital raising for private companies and would create a limited, temporary and scaled regulatory compliance pathway, referred to as an “IPO on-ramp,” for companies going public and newly public companies. The IPO on-ramp is designed to reduce the costs and uncertainties of accessing public capital.


Continue Reading The March Towards Meaningful Reform for Small and Emerging Growth Companies Moves Forward – House Passes Measures to Open Private Capital Raising and Facilitate an On-Ramp of New IPOs

Just before 2011 year-end, the SEC adopted final rules first proposed in January 2011 to exclude the value of an investor’s home when determining if an investor meets the net worth test for an accredited investor. A person’s status as an accredited investor affects eligibility, sophistication and information requirements for certain unregistered securities offerings. The final rules differ from the proposed rules by addressing home equity indebtedness incurred in the 60 days prior to an offering, and by grandfathering securities purchase rights held prior to enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank").


Continue Reading Regulatory Update: SEC Adopts Final Rules Defining “Accredited Investor” Consistent with Dodd-Frank

In The Bank of New York Mellon Trust Co., N.A., v. Liberty Media Corp., No. 284, 2011 WL 4376552 (Del. Sept. 21, 2011), the Delaware Supreme Court held that Liberty Media Corp’s proposed split-off was not sufficiently connected to previous transactions to warrant aggregation of both the proposed and previous transactions, and thus the proposed split-off did not constitute a sale of "substantially all" of its assets. Bond indentures issued by corporate borrowers typically contain a covenant that the issuer will not sell "all or substantially all" of its assets without the substitution of the purchaser as successor obligor or without otherwise causing a default and acceleration. This landmark ruling should allow corporate issuers accessing the debt capital markets greater flexibility to manage assets and dealmakers’ increased clarity in interpreting a standard indenture provision.
 


Continue Reading Delaware Supreme Court Clarifies When a Series of Dispositions will not Trigger an “All or Substantially All” Indenture Covenant