SEC’s Cyber Unit Takes Aim at ICOs

For the second time in less than a month (click here for a prior enforcement action), the SEC’s newly created Cyber Unit has shut down an initial coin offering (ICO).  This time the ICO was for Munchee, Inc., a California-based developer of an iPhone application for people to review restaurant meals.  The recent enforcement activity follows several policy statements and warnings regarding ICOs.  … More

SEC Staff Issues New Guidance on Shareholder Proposals

On November 1, 2017, the SEC’s Division of Corporation Finance issued Staff Legal Bulletin 14I reflecting guidance ostensibly easing its prior views on the availability of no-action relief for certain shareholder proposals submitted under Rule 14a-8.  The guidance affects four topics under the rule:

  • the ordinary business exclusion (Rule 14a-8(i)(7));
  • the economic relevance exclusion (Rule 14a-8(i)(5));
  • proposals by proxy; and
  • the use of images and graphs in supporting statements.…
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Investor Concern Regarding Dual-class or Multi-class Stock Continues

On September 26, 2017, proxy advisory firm Institutional Shareholder Services (ISS) released the results of its annual Governance Principles Survey, which showed that 43% of surveyed investors consider multi-class capital structures with unequal voting rights inappropriate for a public company under all circumstances.  An equal percentage felt such structures may be appropriate in the presence of protections for low-vote shareholders.  Only 5% supported this structure without limitations. … More

SEC Provides Hurricane Relief

On September 28, 2017, the Securities and Exchange Commission announced regulatory relief for a broad class of companies and others affected by Hurricane Harvey, Hurricane Irma, and Hurricane Maria.  The SEC staff also indicated that it would be responsive to other issues that these parties may face if brought to the staff’s attention on a case-by-case basis.

The SEC issued an exemptive order that conditionally exempts affected persons from certain requirements of the federal securities laws for a period following the hurricanes. … More

T+2 do I need to know this and what is T anyway…?

The SEC recently amended Exchange Act Rule 15c6 1(a) to shorten the standard settlement cycle for most broker dealer securities transactions from “T+3” to “T+2.” In plain English, the old rule provided that any trade of securities must settle within three business days following the trade date, or T, meaning the buyer must have the security in its brokerage account and the seller must have the cash by that date.… More

Hyperlinks required for all filed exhibits

Effective September 1, 2017, public companies will be required to include hyperlinks to each exhibit listed in the exhibit index to a registration statement or report. Exhibits filed in eXtensible Business Reporting Language (XBRL) or exhibits filed with Form ABS-EE are excluded from this requirement. This requirement will make all exhibits to a filing, including those incorporated by reference from earlier filings, more easily accessible to investors. Companies should plan for additional review time,… More

SEC Staff Clarifies Registration Statement Relief for Omitting Financial Information

On August 17, 2017, the SEC staff issued two new C&DIs (Securities Act Forms 101.04 and 101.05) to clarify the financial information that emerging growth companies (EGCs) and other issuers can omit from confidentially submitted draft registration statements.  An issuer can omit interim financial information if it anticipates that the registration statement will not, at the time of the contemplated offering (or, in the case of non-EGCs,… More

SEC Increases Registration Fees

On October 1, 2017, fees for registration statements under the Securities Act will increase to $124.50 per million from $115.90 per million, a 7% increase.  The new fee rate will also apply to proxy statements for mergers and acquisitions and tender offer statements.

Issuers who anticipate a near-term need to file a registration statement, such as a shelf registration statement on Form S-3, should consider whether the filing can be made before the higher fee rate kicks in.

SEC Report on ICOs and Token Sales – “If It Sounds Too Good to be True…”

On July 25, 2017, the SEC issued an investigative report to advise those who have used or may consider using a virtual organization or capital raising entity that uses distributed ledger or blockchain technology to facilitate capital raising that these activities are subject to U.S. federal securities laws. The SEC also released an investor bulletin to educate and caution potential investors about this new and growing type of capital raising.… More

Direct Listing – Alternative to an IPO?

The New York Stock Exchange recently re-filed a proposal to permit direct listings, where private companies list a class of shares without an IPO or other registered offering.  The rule change was likely prompted by apparent market interest in such a path to “going public” coupled with the NYSE’s belief that its rival, The Nasdaq Stock Market, already permits direct listings.

If approved by the SEC,… More