Securities Blog

Why you should have a Private Placement Memorandum when raising to accredited investors. There are four principal conditions to a private placement “not involving a public offering” of securities under Section 4(a)(2) and Regulation D, Rule 506; namely: There are two ways to satisfy condition 2 above (Availability of material information); namely: If a private…

General Solicitation General Solicitation is the act of marketing a capital raise publicly. Rule 506(b) of Regulation D prohibits using general solicitation to market securities. General solicitation is undefined in the statutes or rules, and the Securities and Exchange Commission (SEC) takes a case by case approach. A typical example of general solicitation is telling…

Do you need a private placement memorandum for a friends and family capital raise? At first blush, you might think that creating a private placement memorandum can be done without an attorney. All you need to do is talk about the business plan, take the investment money, and then file a Form D with the…

The Securities and Exchange Commission suspended trading in the securities of Nevada-based American Retail Group, Inc. (aka Simex, Inc.) after they claimed to be partnered with an SEC qualified custodian for use with cryptocurrency transactions in two August 2018 press releases. The releases reported that the cryptocurrency transactions would be “under SEC Regulations,” and that…

Advantages of Raising Capital with a PPM There are three main reasons to provide potential investors with a full private placement memorandum (“PPM”): (1) to effectively market your company to potential investors; (2) to negotiate with your investors from a position of strength and (2) to protect yourself from liability in the event of a…

What is an “exemption from registration?” Regulation D’s Rule 504 and Rule 506 grant exemptions from registration if different requirements are met. Rule 504 Rule 504 of Regulation D provides an exemption from registration for a 12-month period on the offer and sale of up to $5,000,000. Rule 504 permits general offerings and solicitations so…

Is the Securities and Exchange Commission Helping or Harming Cryptocurrency Entrepreneurs? Hester M. Pierce. Commissioner to the U.S. Securities and Exchange Commission (“SEC”) gave a speech via video in Zug, Switzerland on November 7, 2018 on the impressions that the United States regulatory environment is giving to today’s cryptocurrency entrepreneurs. At the beginning of her…

SEC Charges Two Celebrities with Unlawfully Touting Initial Coin Offerings On November 29, 2018, the Securities and Exchange Commission (“SEC”) charged two celebrities with unlawfully touting initial coin offerings (“ICOs”). This is the first time that the SEC has brought touting violation charges involving ICOs. Professional boxer, Floyd Mayweather Jr. and music producer Khaled Khaled,…

SEC Charges Promoter with Penny Stock Market Manipulation Scheme The Securities and Exchange Commission (“SEC”) charged a public company promoter and his company with conducting a scheme to manipulate trading in at least 97 penny stocks. According to the SEC’s complaint filed November 28, 2018, Eric Landis arranged with third party advertisers for publicly traded,…

SEC Forces Initial Coin Offering Issuers to Register Tokens as Securities The Securities and Exchange Commission (“SEC”) charged two companies, CarrierEQ Inc. (“Airfox”) and Paragon Coin Inc., (“Paragon”) who conducted Initial Coin Offerings (“ICOs”) after the SEC published its famous DAO Report of Investigation concerning the topic of ICOs. On November 16, 2018, after an…