Securities Blog

How is the definition of an accredited investor being expanded? The proposed rule will amend the definition of an “accredited investor” as follows: With regard to individuals, the proposed rule would add the term “spousal equivalent” to the definition of a spouse, and give accredited investor status to individuals: With regard to entities, the proposed…

How to Comply with Rule 144 as a Non-Affiliate What is Rule 144? Rule 144 under the Securities Act of 1933 is enforced by the Securities and Exchange Commission (“SEC”). When a shareholder acquires restricted securities or holds control securities, the shareholder must find an exemption from the SEC’s registration requirements in order to sell…

Mergers and Acquisitions Explained Mergers and acquisitions are an integral part of how industries are shaped. They can allow smaller companies to better compete with larger established companies or consolidate market share to increase profits. Being acquired can also offer a smaller business a less costly route to become a public company. The terms, merger…

August 13, 2019 The Securities and Exchange Commission (“SEC”) charged Antonio Bravata, a repeat securities law violator, with securities fraud after learning that Bravata was offering securities of a company he owned and controlled while serving his sentence for another Ponzi scheme. The SEC was able to put a stop to the securities offering before…

Materiality in is a type of fraud, because it uses informational defects to evade a transaction. A fact is material if “there is a substantial likelihood a reasonable investor would consider important” while deciding something concerning securities. (TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976). The Supreme Courts wanted to make the definition…

We recently posted about the advantages of a Private Placement Memorandum (ppm), and the necessity of complying with all of the requirements to stay within the exemption granted by the Securities and Exchange Commission. This post explores the reasons you need the assistance of a securities attorney in the preparation and execution of your PPM…

Capital Formation, Liquidity, and Risk Management The three basic functions of securities markets are: capital formation, liquidity, and risk management. These markets pair the companies that need capital to function, and the investors with capital that are looking for a return on their investments. It also connects investors together, those that are looking to liquify…

According to Forbes, “The term sheet is one of the most critical documents an entrepreneur can ever design or sign.” A term sheet is a document that results from initial negotiations between the business owner and potential investors prior to selling your stock to outside investors. It is a non-binding contract document, so it is…

On Thursday, December 27, 2018 the Securities and Exchange Commissionbegan operation within its plan during a federal government shutdown. They say they have “staff available to respond to emergency situations involving market integrity and investor protection.” That meansthat out of the 4,426 active staff employees of the SEC, 175 will be retained to protect life…

The JOBS (Jumpstart Our Business Startups) Act of 2012, is an amendment to both the Securities Act and the Exchange Act. Its purpose is to encourage economic growth and the increase in jobs, by relaxing the regulatory encumbrances on business start-ups that trying to raise capital in securities markets. There are three major differences in…