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Understanding the SEC’s Final Rules on General Solicitations

There are a lot of facts swirling around the startup community in regards to the new SEC rules that allow general solicitation when raising money.

  Gavin Johnson

There are a lot of differing facts swirling around the startup community in regards to the new rules that will allow general solicitation when raising money for your company. We wanted to take a few minutes to explain some of the common questions and concerns that we’ve heard recently.

Background For as long as you and I have been alive, companies that were raising money under Rule 506 of Regulation D could not generally solicit their offers. However, on September 23, 2013, startups and other companies are going to be able to use general solicitation to offer their securities to investors under the new Rule 506(c) of Regulation D. Check out our post on private placement exemptions to learn more about securities...

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iVLG Attorney Gideon Dionne’s Response to Article Regarding SEC’s Proposed Rules Published in the Wall Street Journal

iVLG managing partner Gideon Dionne submitted a response letter to a recent Wall Street Journal opinion editorial by David Verrill.

  Gavin Johnson

To follow up our post from last week announcing our new investor verification services, iVLG managing partner Gideon Dionne submitted a response letter to a recent Wall Street Journal opinion editorial by David Verrill. Gideon’s response was published in today’s Wall Street Journal.

Mr. Verrill argued that the SEC’s proposed rules requiring heightened verification standards under the proposed Rule 506(c) is going to cripple the ability of investors to utilize the rule, and ultimately, reduce (or eliminate) the intended benefits of the JOBS Act.

In Gideon’s response, he respectfully disagrees with Mr. Verrill, noting that the new proposed verification standards “will result in reliable, secure and low-cost verifications for investors, platforms and entrepreneurs.” To conclude, Gideon states (and iVLG believes) that “third-party verification...

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Intrastate Securities Offerings Under 3(a)(11) and Rule 147 & 147a

Today’s post highlights the federal securities law exemption for intrastate securities offerings made pursuant to rule 3(a)(11) and rules 147 and 147a.

  Gavin Johnson As we’ve discussed previously, the Securities and Exchange Commission (SEC) is the governmental body responsible for the regulation and enforcement of federal securities laws that govern both interstate securities offerings and intrastate securities offerings....

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iVLG News Roundup Week 40: Mergers & Acquisitions, Securities Regulation, and Housing

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

  Gavin Johnson Mergers and Acquisitions

Exxon Mobil Buys Canadian Oil and Gas Company Oil giant Exxon Mobil agreed to terms on Wednesday to purchase Canadian oil and gas company Celtic Exploration. Exxon is paying roughly $3.1 billion in cash and stock. Exxon has been actively seeking to expand its presence in the energy-rich shale that is in western Canada.

The deal includes Exxon paying about $24.5 Canadian dollars ($24.92 USD) per share, which is roughly 35 percent above the Canadian company’s closing price. Celtic investors will also receive .5 of a share in a new company that will be led by Celtic’s current management team.

Microsoft Makes Two Deals in Two Days Microsoft announced Wednesday that it has closed a deal to acquire MarketingPilot Software, LLC, a...

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Securities Law: An Overview of Regulation A+

Regulation A+ is a new way for companies to raise money from investors. In this post we discuss Reg A+ and compare it to other options for raising capital.

  Kyle Hulten Regulation A+ is a new way for companies to raise money from investors. In this post we discuss Reg A+ and compare it to other options for raising capital....

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iVLG News Roundup Weeks 38 & 39: Securities Regulation, Mergers & Acquisitions, and IPOs

  Kyle Hulten Securities Regulation

Consumer advocacy group urges SEC to reconsider rules lifting ban on general solicitation Consumer Federation of America submitted a comment letter to the SEC expressing its, “strong opposition to the Commission’s proposed rule to lift the ban on general solicitation and advertising in private offerings.” On August 29th, the SEC issued proposed rules which would implement Title II of the JOBS Act, allowing companies issuing securities pursuant to Rule 506 to utilize general solicitation under certain conditions. The Consumer Federation of America identified a number of substantive and procedural concerns, including:

That the standard for “reasonable steps to verify” was too broad to allow for protection of consumers; That the accredited investor standard doesn’t capture investor sophistication–basically the concern is that accredited...

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Securities Registration and Private Placement Exemptions

  Kyle Hulten

Last week we talked about the securities registration requirements for public offerings. This week we’re taking a look at the registration exemptions.

Some Background on Securities Registration Exemptions Under the Securities Act of 1933 (the ’33 Act), a private securities offering is exempt from the registration statement and prospectus requirements of public securities offerings. Section 4(2) of the ’33 Act provides that the registration requirements “shall not apply to transactions by an issuer not involving any public offering.” Shockingly (if you’re not familiar with federal regulations), the terms “public” and “private” are not defined in the ’33 Act.

In general, an offering is considered to be private when the number of offerees and ultimate purchasers is relatively small, the investment is prudent in the...

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iVLG Blog News Roundup Week 33: Securities Laws; Insider Trading; Mergers & Acquisitions; etc.

  Kyle Hulten Securities Law

SEC Further Delays Ruling on Title II of JOBS Act The SEC Chairman Mary Schapiro has informed members of Congress that the SEC will delay implementing rules that would give effect to Title II of the JOBS Act, which will remove the general solicitiation ban of securities offered under Rule 506. The Wall Street Journal is reporting that the coming changes to Rule 506, which were thought to be taking effect as early as August 22nd, will not take effect until this fall at the earliest. Rather than implementing interim rules, the SEC will submit proposed rules and solicit comments on the proposed rules. Representative Patrick McHenry wrote a letter to Chairman Schapiro relating his frustration that implementation of the...

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News Roundup 2012 Week 16: Securities Law, Corporate Governance, JOBS Act, Corporate Finance, Etc.

  Kyle Hulten Securities Transactions & Corporate Governance

Google Stock Split Preserves Founder Control Google’s stock split that was announced last Friday created a new class of non-voting stock. Google’s stock structure provides for 66% of the voting power to be concentrated in the hands of three individuals: the company’s two co-founders, Larry Page and Sergey Brin, and the Executive Chairman, Eric Schmidt. By creating the class of non-voting stock, and distributing this stock in the stock split, the controlling shareholders will avoid having their voting rights diluted. Other web companies such as Zynga, Facebook, and Groupon have implemented a similar stock structure, which allows for visionary company leaders to maintain company control. The drawback is that others, including investors and employees, have relatively fewer votes....

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iVLG News Roundup Week 34: Securities Regulation; Mergers & Acquisitions; Intellectual Property; etc.

  Kyle Hulten Securities Laws

SEC Pushes Back Proposed JOBS Act Rules, Again Last week we wrote about how the SEC was opting to issue proposed rules for Title II of the JOBS Act at its August 22nd meeting, rather than implementing interim rules, as had been anticipated. But on August 21st, just a day before the proposed rules were set to be unveiled, the SEC issued a notice that the rules would not be proposed until August 29th. We’ll update update our blog with details on the proposed rules when they are announced. You can check out this post we wrote in July to get a refresher on the expected subjects of rulings by the SEC on Title II.

Mergers & Acquisitions

IBM Acquires Kenexa IBM has...

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