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New York Relents on Form D Filings

December 18, 2020 By Andrew Abramowitz Leave a Comment

Form D FilingsAs of December 2, 2020, New York has joined other states in requiring that Form Ds filed with the SEC for securities offerings be submitted to the state via the EFD electronic system, replacing the state’s previously-required Form 99.

New York has long been a holdout on this front since 1996 when Congress passed the National Securities Market Improvement Act, which was intended to rationalize the crazy quilt patchwork of individual state “blue sky” laws to be complied with wherever securities were sold. NSMIA expressly preempted any requirements from a state beyond filing a copy of the Form D along with a filing fee and a consent to service of process. Most states quickly amended their blue sky laws to require only what NSMIA permitted. New York, however, continued to require the filing of a Form 99, which clearly required more disclosure from issuers than was permitted under NSMIA.

A subcommittee of the New York State Bar Association issued a position paper to the effect that New York’s Form 99 requirement could be disregarded for private placements because of the preemption by NSMIA. Many large law firms, in turn, advised their clients that no filing in New York was necessary. Still, it’s an uncomfortable position for risk-averse corporate law firms to advise clients that it’s acceptable to ignore what, from the state AG’s perspective, was still a requirement.

Now, with New York having relented on this issue, the procedure is the same as with most states: prepare and file the Form D with the SEC, and then just check the box for New York on the EFD filing. New York’s filing fee of $300 to $1,200, depending on the offering amount, is added to the total from other states on the filing. This development eliminates one of the quirks of New York law that made it unique, but it’s really an unqualified good development and long overdue.

Filed Under: SEC Disclosure Matters

The Golden Age of Non-Interruption

November 30, 2020 By Andrew Abramowitz Leave a Comment

The Golden Age of Non-InterruptionI have found over my 23 years of law practice that, assuming I’ve consumed my usual copious amount of coffee, I can be quite productive and efficient when I get into a flow. When that flow is interrupted – by a phone call, someone popping into my office for a quick question, a car alarm going off, etc. – it can be difficult to get back into the groove. The good news is that a number of workplace trends in recent years have resulted in a general decline in interruptions, leading to more efficient work.

At least for me, the key development has been the advent of email. Everyone likes to complain about email – not me! As long as you don’t set your email system to notify you of every incoming email, which for me would be crazy-making, you are in control of when you look at it. Unlike someone making a phone call, the sender of an email is not expecting a literally immediate response. Of course, law is a service business and clients have reasonable expectations of a prompt reply, but the checking of the email can wait until you’ve finished reviewing that convoluted contractual provision.

[Read more…]

Related posts:

  1. Email vs. Phone/Meeting
  2. Can Employee Autonomy Initiatives Be Implemented in Big Law?
  3. Email Triage

Filed Under: General/Miscellaneous

The SEC Streamlines Accredited Investor Verification Under Rule 506(c)

November 21, 2020 By Andrew Abramowitz Leave a Comment

The SEC’s recent final rule release regarding exempt offerings covered various topics, including the subject of my previous post, on the expanded offering limits for Regulation CF crowdfunding and Regulation A offerings. In the release, the SEC also provided some welcome relief in the accredited investor verification process for Rule 506(c) offerings.

[Read more…]

Related posts:

  1. Reluctance to Engage in Accredited Investor Verification
  2. Verification of Accredited Investor Status
  3. Simultaneous Regulation CF and Rule 506(c) Offerings

Filed Under: Crowdfunding, Financing Transactions/Securities Offerings

The SEC Broadens the Crowdfunding and Regulation A Exemptions

November 9, 2020 By Andrew Abramowitz Leave a Comment

The SEC issued a 388-page final rule release, entitled Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in Private Markets. (The clunky wording seems like it was done to accommodate a catchy acronym, but “FCFAEIOBIATCIPM” doesn’t really flow.) The release details rule changes in a variety of areas relating to private offerings, but I will focus for this post on the expansion of the crowdfunding (Regulation CF) and Regulation A offering exemptions, and cover other topics in future posts. Here are the SEC’s press release and fact sheet about all the new rule changes.

[Read more…]

Related posts:

  1. Regulation A+ – An Improved Way for Smaller Companies to Go Public
  2. Regulation A+ Proposed Rules
  3. The Latest from the SEC on Private Offering Regulation

Filed Under: Crowdfunding, Financing Transactions/Securities Offerings

The SEC Proposes a Clear Finder Exemption

October 19, 2020 By Andrew Abramowitz Leave a Comment

I’ve noted in several blog posts (most recently here) that the SEC had not provided definitive guidance on an exemption for so-called “finders” from broker-dealer registration requirements. Now we have that guidance, at least in proposed form, which if enacted would provide clarity for issuers and would-be finders. The proposal was approved by the SEC Commissioners on a 3-2 vote (because it’s 2020 and of course it’s contentious), so there is perhaps a greater than usual possibility of changes to the rules before finalization.

[Read more…]

Related posts:

  1. Pushing Back Against the SEC on Finders Rules
  2. Use of Finders in Securities Offerings
  3. Regulation A+ Proposed Rules

Filed Under: Startup Matters

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Press Coverage

"Andrew Abramowitz, a lawyer in Manhattan who has worked with both buyers and sellers of private placements, said every investor should approach a private placement skeptically." -- Paul Sullivan (New York Times)

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"If the goal [...] is to protect people from losing all of their money in an illiquid investment, the current standard fails on that count, too. Andrew Abramowitz, a lawyer in Manhattan who has worked with both buyers and sellers of private placements, said a better standard might be to limit how much of their net worth people can invest." -- Paul Sullivan (New York Times)

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