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Category Archives: Capital Formation

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“Burger King” May Not Allow You to Have it Your Way. . . Is the Two-Tier M&A Deal Ending?

Posted in Capital Formation, Corporate Financing, Hedge and Private Equity Funds, Mergers and Acquisitions

A popular two-tier merger and acquisition structure may trigger certain prohibitions under the Securities Exchange Act of 1934.  In particular, this problem relates to the so-called “Burger King” structure, arising from the private equity fund acquisition of the fast-food chain by a private equity fund, and its simultaneous pursuit of a tender offer and a traditional one-step merger.  The Burger… Continue Reading

You Can’t Be a Bad Actor Before the SEC Has Crowdfunding Rules

Posted in Capital Formation, Dodd-Frank, JOBS Act

The SEC’s Division of Corporation Finance will consider a bar on so-called “bad actors” from private offerings before announcing rules on crowdfunding under the JOBS Act.  However, we anticipate there will be an additional delay given the turnover at the SEC and the recent departure of its Corp Fin Director.  As you have undoubtedly heard, the SEC has… Continue Reading

Lawyers and Issuers Really Need to Listen to SEC Comments Regarding Cyber Security

Posted in Capital Formation, Cyber-Security, Law Firms and Lawyers

The SEC’s Division of Corporation Finance has indicated that lawyers for issuers and issuers themselves should focus on and respond to the SEC’ Staff’s comments during the corporate filing review process.   The SEC’s Staff has seen that issuers and their counsel are not necessarily responding completely to comments.  The SEC Staff believes that this has caused the process… Continue Reading

Still Waiting on the Final General Solicitation Ban-less Rule

Posted in Capital Formation, JOBS Act

Despite some strenuous objections, the SEC agreed to propose a rule to lift the ban on general solicitation and advertising for certain private offerings as required by the JOBS Act. The JOBS Act required to the SEC to allow Securities Act of 1933 Rule 506 issuers to broadly market their securities so long as the securities were purchased… Continue Reading

Internet Crowd Funding Websites Spike Although There Are No Rules

Posted in Capital Formation, Corporate Financing, JOBS Act

An intriguing phenomenon has occurred.  Regulators have recently noticed that there is a sharp rise in Internet crowd-funding sites.  Ironically, the SEC still has not promulgated rules for allowing small businesses to raise capital online.  The SEC believes that those rules are months away.  Nonetheless, regulators estimate that there are almost 9,000 websites already dedicated to… Continue Reading

You Gotta Be A Big Boy To Play In The Private Investment Transaction Game

Posted in Capital Formation, Corporate Financing, Private Placements, SEC Enforcement, Securities Associations, Securities Litigation

“Big Boy Letters” are usually used to identify that the buyer in a transaction has made its own independent assessment of certain risks involved and that certain information has not been disclosed to the buyer by the seller.  In particular, this means that a party is not relying upon certain representations or the lack of representations. The… Continue Reading

What Are the Problems with Ticks and Minimum Spreads?

Posted in Capital Formation, Securities Associations, Securities Exchanges

A senior Congressman has indicated that he wants to see a wide-ranging pilot program to examine different minimum spreads for different stocks.  He believes that such a program would allow the SEC to determine if tick sizes in equity markets are appropriate. Tick sizes are increments whereby a stock price may move, and, currently, that size is $0.01. … Continue Reading

Non-US Auditors Are Being Scrutinized by SEC

Posted in Accounting Standards, Capital Formation, PCAOB Enforcement

The SEC is extremely concerned about foreign auditors. In particular, the SEC is worried that those who work in certain European countries and in China are not subject to auditor requirements or the PCAOB.  Essentially, the SEC is concerned over the lack of US oversight over these foreign auditors.  Further, the SEC is concerned about if… Continue Reading

Crowd Funding Delayed

Posted in Capital Formation, JOBS Act

In a not so surprising development, the SEC announced that even SEC registered broker dealers may not act as a crowd funding intermediaries under the JOBS Act because the SEC has not adopted regulations.  Crowd funding allows companies to finance new businesses by accepting and pooling donations of up to $1 million over the Internet if… Continue Reading

Jobs Act Emerging Growth Status Disclosure

Posted in Capital Formation, JOBS Act, PCAOB Enforcement

The SEC’s Chief Accountant announced that a number of companies may be unaware they fall under the disclosure requirement for Emerging Growth Company status under the JOBS Act.  As a result of this status, the JOBS Act requires these companies to disclose such a status in their public filings with the SEC.  This disclosure and the resulting status… Continue Reading