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SEC Hands Out Hefty Reward to Whistle-Blower

SEC reported Tuesday that it handed out the first reward to a whistle-blower who helped federal securities regulators shut down an investment fraud.

  Gavin Johnson

The Securities and Exchange Commission reported Tuesday that it handed out the first reward to a whistle-blower who helped federal securities regulators shut down an investment fraud. Under the SEC’s new whistle-blower reward program, the commission cannot disclose any information about the firm involved, including the information that the whistle-blower provided, but it did disclose that the case has led to more than $1 million in sanctions.

The new reward program was created as a part of the Dodd-Frank overhaul of the financial industry. The $50,000 payout—which is roughly 30 percent of the amount collected in the enforcement action—to the whistle-blower is the maximum reward under the new program. However, as the sanctions increase and more money is collected, the payout...

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SEC Approves Listing Standards for Compensation Committees and Advisers

The SEC approved a new rule that requires national securities exchanges to adopt listing standards for compensation advisers of public companies.

  Gavin Johnson

On June 20, the SEC released a statement announcing that it has approved a rule (Rule 10C-1) that requires national securities exchanges to adopt listing standards for boards of directors and compensation advisers of public companies. You can view the Final Rule.

The new rule requires the listing standards to include:

The independence of the individual members of the compensation committee; The committee’s authority to retain compensation advisers; The committee’s consideration of the independence of any compensation advisers; and The committee’s responsibility for the appointment, compensation, and oversight of the work of any compensation adviser.

In order for a company to be listed on a particular securities exchange, the company must meet the new listing standards of that particular exchange in order for its shares to...

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SEC Gives Thumbs Up for Company Announcements Through Social Media

The SEC report makes clear that companies can use social media platforms to announce information to investors to comply with Regulation Fair Disclosure.

  Gavin Johnson

The SEC issued a report that makes it clear that companies can use social media platforms, e.g. Facebook and Twitter, to announce key information to investors to comply with Regulation Fair Disclosure (Regulation FD) so long as the investors have been alerted about the announcement and which social media outlet being used.

The SEC’s report confirms that Regulation FD applies to social media and other emerging means of communication used by public companies the same way it applies to company websites. In 2008, the SEC issued guidance that clarified that websites can serve as effective means of communication to announce information to investors so long as the investors are aware of where to find the information.

Regulation FD requires companies to distribute...

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President Obama Appoints New Head of the SEC

President Obama named Mary Jo White, the first female United States attorney in Manhattan, to the head the Securities and Exchange Commission (SEC).

  Gavin Johnson

Yesterday, President Obama named Mary Jo White, the first female United States attorney in Manhattan, to the head the Securities and Exchange Commission (SEC). Many believe that the appointment of White, a former prosecutor and the first prosecutor to head the SEC, signals a renewed resolve to hold Wall Street accountable for any wrongdoing. White is well-known for her aggressive prosecution tactics.

White spent more than a decade as a federal prosecutor in New York City, where she pursued white-collar crime and Wall Street fraud. One of her most infamous cases involved prosecuting former crime boss John Gotti. Another one of White’s better known cases involved prosecuting those individuals responsible for the 1993 World Trade Center bombing. For a more extensive...

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SEC Advisory Committee Issues Accredited Investor Recommendations

The SEC recently release advisory committee recommendations for updates to the definition of accredited investor under Rule 501 of Reg D.

  Gavin Johnson

The SEC recently release advisory committee recommendations for updates to the definition of “accredited investor,” other issues related to accredited investors, and recent updates to the securities laws. For years, there has been concern over the definition of accredited investor—specifically whether the financial thresholds are outdated—and whether changes to the definition would narrow the number of accredited investors, which could significantly reduce access to capital for startups and established private companies. The committee’s most recent recommendations do not include a higher financial threshold, but they do include a number of other recommendations and propose analysis of whether the threshold should be increased.

Highlights from the Committee’s Recommendations: Does the definition of accredited investor accomplish its goal?

The first recommendation looks at whether the...

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SEC Form D Amendments

Companies and funds raising capital must file their Form D amendments with the SEC online using the SEC's EDGAR filing system.

  Collin Roberts

When a company decides to raise capital, the company must file Form D giving notice of an exempt offering of securities with the Securities and Exchange Commission. Commission rules require the notice to be filed by companies and funds that have sold securities without registration under the Securities Act of 1933 in an offering based on a claim of exemption under Rule 504, 505 or 506 of Regulation D or Section 4(5) of that statute.

Companies and funds must file their Form D amendments with the SEC online using the SEC’s EDGAR (electronic gathering, analysis and retrieval) system. One question that often arises is this: when is a person or company required to file Form D amendments?

Form D Amendments Filing

A Form D filer should...

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Issuing Restricted Stock and Stock Options under SEC Rule 701

SEC Rule 701 allows private companies to grant compensatory equity awards pursuant to written compensation benefit plans or written compensation agreements.

  Gavin Johnson

It’s time to grow your startup company, and because you’d prefer to retain the limited cash flow you have, you’ve decided to compensate new employees with stock in order to incentivize joining your team and working hard to create a valuable company. You’re not alone. It’s very common for startups to issue equity compensation in form of stock options or restricted stock to employees. And luckily for you, there’s a federal securities law exemption for issuing equity to employees. Today’s post highlights the exemption under Rule 701, and what you need to know in order to make sure your securities offering complies with the rule.

SEC Rule 701

As we’ve discussed in previous posts, anytime you issue securities in your company you...

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iVLG News Roundup Weeks 45 & 46: Tully’s Sells; Costco Pays; SEC Cracks Whip

iVLG's weekly News Roundup provides business owners and entrepreneurs the latest news surrounding business and recent cases and legislation.

  Gavin Johnson Regional News

Tully’s Selling Coffee Shops to Kachi for $4.3 Million

Tully’s Coffee Corp. has seen its ups and downs recently. The company filed for Chapter 11 bankruptcy protection in October, and announced Wednesday that it will sell its coffee shops in Washington and California to Kachi Partners, a Colorado-based entrepreneurial financial group. Kachi was one of 13 companies that expressed interest in purchasing Tully’s, and one of the 56 potential buyers that were contacted.

Subject to court approval, the acquisition will close by the end of December. Kachi plans to continue to operate the existing coffee shops under the Tully’s name.

Business Booming for Costco; Announces Special Dividend of $7 Cash

Costco Wholesale Corp., headquartered in Issaquah, announced the dividend as a result of...

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The SEC’s Proposed Amendments to Regulation D, Form D and Rule 156

The proposed rules discussed in this article are a part of a major regulatory shift in the US private securities markets.

  Kyle Hulten click here to view or download this article Background

The proposed rules discussed in this article are a part of a major regulatory shift in the US private securities markets. For the last 80 years, American companies seeking to raise capital by selling stock have been faced with the alternative choices of conducting an offering without using general solicitation (a private offering) or registering the offering with the SEC (“going public”).

In 2012 Congress passed the JOBS Act. Part of the JOBS Act (Title II, to be specific) created a new way to offer stock, allowing general solicitation within the existing private placement framework. This new rule is called Rule 506(c). Securities issuers can still use the old rules, including the old Rule...

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News Roundup Week 15: Crowdfunding & the SEC, Copyright & the DMCA, Mergers & Acquisitions, etc.

  Kyle Hulten CROWDFUND Act & Securities Law

SEC Seeks Feedback On JOBS Act The SEC announced on Wednesday that it is seeking feedback on the changes that will be forthcoming under the JOBS Act.  The JOBS Act makes it easier for companies, smaller companies in particular, to raise money through the sale of equity. In the JOBS Act, Congress left much of the heavy lifting to the SEC. For example, the portion of the bill that requires crowd funding websites to protect consumers states “intermediareies shall take such measures to reduce the risk of fraud with respect to such transactions, as established by the Commission (the SEC), by Rule.” Because important aspects of this bill have been left to the SEC, it will be...

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