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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

Payments to Independent Contractors Under Paycheck Protection Program Loans

April 4, 2020 By Andrew Abramowitz Leave a Comment

The Small Business Administration (SBA) has just launched the Paycheck Protection Program (PPP), arranging for forgivable loans to small businesses affected by COVID-19. There are, however, widespread implementation issues, with several banks that will administer the loans not yet being ready to process loan applications, as of April 6, 2020. For general guidance on the program, I can provide you with this fact sheet from the Treasury Department and a website guide from the SBA. Additionally, most large law and accounting firms are constantly issuing client alerts summarizing the latest developments, which are available on those firms’ websites.

[Read more…]

Related posts:

  1. Employee vs. Independent Contractor
  2. Bridge Loans
  3. Recent Trends in Financing Startups

Filed Under: General/Miscellaneous

The SEC’s Proposed Expansion of Accredited Investors

January 21, 2020 By Andrew Abramowitz Leave a Comment

When to use a Private Placement Memorandum | Andrew Abramowitz, PLLCThe SEC has issued a proposal to expand the definition of “accredited investor” as used for the Regulation D safe harbor for private offerings. This press release/fact sheet summarizes the changes. There are a number of technical updates to reflect developments in how business is now conducted, e.g., LLCs with sufficient assets would qualify in the same manner as corporations now do. However, the change that would likely have the most impact, at least in my practice, is the inclusion as accredited investors of natural persons with appropriate professional certification, such as holders of a Series 7 securities license, even if they don’t qualify under the existing standards for natural persons for income or net worth. I’m not aware of any significant opposition to this concept and assume it will be enacted by the SEC after public comment.

However, any time the topic of the accredited investor definition is raised serves as a trigger for me to raise the issue of investment limits in private offerings. Crowdfunding offerings under Regulation CF, enacted in recent years and still used far less than Regulation D, impose investment limits on investors that are based on a percentage of the investor’s income or net worth. Accordingly, the structure precludes a total financial wipeout of the individual investor as a result of a failed investment. [Read more…]

Related posts:

  1. The Latest on Possible Tweaks to the Accredited Investor Definition
  2. Reluctance to Engage in Accredited Investor Verification
  3. A Possible Expansion of Regulation A+

Filed Under: Financing Transactions/Securities Offerings, Startup Matters

The “Get Everyone in a Room” Fallacy

November 13, 2019 By Andrew Abramowitz 1 Comment

Every deal lawyer has had the experience. The deal negotiations have gone on longer than anyone expected. Frustration is setting in. At that point, one of the individuals involved, more likely to be one of the principals instead of an attorney, demands an all-hands, in-person meeting to get the deal done, and “we’re not leaving until we have a deal.” This impulse, while understandable, is often misguided and can lead to additional frustration.

[Read more…]

Related posts:

  1. A Productivity Tip for Attorneys
  2. Right and Wrong Ways to Expedite Deal Negotiations
  3. Email vs. Phone/Meeting

Filed Under: General/Miscellaneous

Should Solo Lawyers Seek to Partner Up?

September 19, 2019 By Andrew Abramowitz Leave a Comment

Use of Debt Financing by Law FirmsWriting in Above the Law, Jordan Rothman argues from personal experience that solo lawyers would be better off partnering in a law firm with one or more other attorneys. As someone who has operated partner-less for almost 10 years now, after Big Law partner experience (where one literally doesn’t know many of one’s partners because there are so many of them), I’ve seen different arrangements and have some thoughts on these issues. While there are some clear advantages to having partners, much of Rothman’s argument is based on an unduly restrictive assumption about how solo firms must operate.

[Read more…]

Related posts:

  1. Optimal Law Firm Size
  2. Small Firms: Don’t Use Your Smallness as an Excuse
  3. When Clients Demand One Person in a Personal Services Firm

Filed Under: General/Miscellaneous, Legal Practice Advice

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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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Ranked #7 nationally issuer legal counsel for total dollars advised in a PIPE transaction. (PrivateRaise.com January 2016)

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