Identifying potential investors is one of the most difficult challenges facing early-stage companies. The range of amounts sought at this stage is typically greater than what could be provided by the founders and friends and...more
3/18/2024
/ Accredited Investors ,
Broker-Dealer ,
Capital Formation ,
Corporate Issuers ,
Early Stage Companies ,
Financial Industry Regulatory Authority (FINRA) ,
Finders ,
Investment ,
Investors ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Startups ,
Venture Capital
The Securities and Exchange Commission recently brought its first two enforcement actions against issuers of non-fungible tokens (NFTs), resulting in cease-and-desist orders, penalties and other remedies, finding that the...more
10/2/2023
/ Blockchain ,
Cease and Desist Orders ,
Digital Assets ,
Enforcement Actions ,
Howey ,
Investment Contract ,
Investment Opportunities ,
Non-Fungible Tokens (NFTs) ,
Offerings ,
Section 5 ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Securities Transactions ,
Securities Violations ,
Smart Contracts ,
Unregistered Securities
Judge Analisa Torres’ greatly anticipated Order in the SEC’s lawsuit against Ripple is a split decision. The Order basically finds that Ripple’s digital token XRP is a security when sold privately to individuals and...more
7/17/2023
/ Cryptocurrency ,
Digital Assets ,
Institutional Investors ,
Investment ,
Investors ,
Popular ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Smart Contracts ,
Token Sales ,
Unregistered Securities
A new federal law goes into effect March 29, 2023 that conditionally exempts from broker-dealer registration persons who solely intermediate small, private company M&A deals. Persons who intermediate larger private company...more
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here”. Such was the lament of John Ray, the legendary restructuring...more
12/20/2022
/ Commercial Bankruptcy ,
Corporate Governance ,
Crypto Exchanges ,
Cryptoassets ,
Cryptocurrency ,
Directors ,
Financial Services Industry ,
Investment ,
Popular ,
Securities and Exchange Commission (SEC) ,
Venture Capital
What do founders, employees and investors in privately held companies all have in common? Limited opportunity to sell their shares. That’s because of various legal, contractual and market factors that impede the sale of...more
Elon Musk’s contentious relationship with the Securities and Exchange Commission is likely to become even more complicated as a result of Mr. Musk’s filings with the Commission to report his recent purchases of shares in...more
4/11/2022
/ Beneficial Owner ,
Elon Musk ,
Filing Requirements ,
Form 8-K ,
Investment ,
Passive Investments ,
Reporting Requirements ,
Schedule 13D ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Securities Transactions ,
Securities Violations ,
Twitter
The Securities and Exchange Commission just proposed new rules to protect investors in private investment funds. The proposed rules would require private fund advisers to disclose certain information and avoid certain...more
2/22/2022
/ Accredited Investors ,
Investment ,
Investor Protection ,
Investors ,
Private Equity ,
Private Funds ,
Regulatory Oversight ,
Regulatory Reform ,
Rule 506 ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Venture Capital
Ever since the SPAC market exploded in late 2020 and early 2021, the SEC has sounded alarm bells through investor alerts, staff statements and public comments. In March of 2021, it warned investors not to invest in SPACs...more
Background: Crypto Catch 22 -
Followers of the SEC’s efforts to regulate digital tokens will recall former SEC Corp Fin Director William Hinman’s speech at the June 14, 2018 Yahoo Finance Conference in which he introduced...more
10/18/2021
/ Blockchain ,
Cryptocurrency ,
Decentralized Finance (DeFi) ,
Digital Assets ,
Howey ,
Investment ,
Popular ,
Safe Harbors ,
Securities and Exchange Commission (SEC) ,
Token Sales ,
Virtual Currency
The Securities and Exchange Commission announced on July 13, 2021 that it settled fraud charges against a special purpose acquisition company, its sponsor, its sponsor’s CEO and its proposed merger target for making...more
7/26/2021
/ Capital Raising ,
Due Diligence ,
Enforcement Actions ,
Initial Public Offering (IPO) ,
Investment ,
Misleading Statements ,
Private Investment in Public Equity (PIPEs) ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Securities Regulation ,
Special Purpose Acquisition Companies (SPACs)
On May 3, 2021, blockchain-based trading platform operator INX Ltd. announced it had completed its initial public offering of digital tokens, raising approximately $85 million in the IPO from over 7,200 institutional and...more
6/14/2021
/ Blockchain ,
Cryptocurrency ,
Digital Currency ,
Distributed Ledger Technology (DLT) ,
Form F-1 ,
Initial Public Offering (IPO) ,
Popular ,
Regulation A ,
Securities and Exchange Commission (SEC) ,
Token Sales ,
Venture Capital
Perhaps the most vexing threshold issue faced by any company considering a capital raise is which securities exemption to pursue. The chosen exemption largely depends on the targeted amount of the raise, as well as the...more
On December 2, the Securities and Exchange Commission filed a lawsuit against Ripple Labs, Inc. and two of its executives alleging they offered and sold over $1.38 billion of digital asset XRP without registration or...more
3/8/2021
/ Bitcoin ,
Blockchain ,
Critical Infrastructure Sectors ,
Cryptocurrency ,
Digital Currency ,
Enforcement Actions ,
Financial Services Industry ,
Popular ,
Ripple ,
Securities and Exchange Commission (SEC) ,
Securities Violations ,
Unregistered Securities ,
Virtual Currency
It’s pretty common for issuers in follow-on offerings to solicit investors from previous rounds first. Indeed, doing so is often mandatory when early investors have preemptive rights. ...more
2/16/2021
/ Accredited Investors ,
Capital Raising ,
Crowdfunding ,
Financial Regulatory Reform ,
JOBS Act ,
Regulation D ,
Rule 506 Offerings ,
Rule 506(c) ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Venture Capital
A freeze on government regulation is generally perceived by most people as being a positive development for private enterprise. Not necessarily so, however, when the regulation being frozen is itself a reform of preexisting...more
1/25/2021
/ Biden Administration ,
Capital Raising ,
Crowdfunding ,
General Solicitation ,
Offerings ,
Regulation A ,
Regulation CF ,
Regulatory Freeze ,
Regulatory Reform ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Testing-the-Waters Communications ,
Venture Capital
You just raised $1 million in your crowdfunding offering under Title III/Regulation CF. That’s the good news. The bad news? You now have over a thousand shareholders on your cap table, making it unwieldy, an administrative...more
At the 1932 Democratic National Convention, the live band at one point burst into “Happy Days are Here Again”, FDR’s favorite, drawing raucous cheers from convention delegates. It went on to become the Democratic Party’s...more
On November 2, 2020, the SEC adopted significant rule amendments to simplify, harmonize and improve the exempt offering framework to facilitate capital formation and investment opportunities in startups and emerging...more
11/9/2020
/ Capital Formation ,
Crowdfunding ,
Investment Opportunities ,
Offerings ,
Regulation A ,
Regulation D ,
Rule 504 ,
Rulemaking Process ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Testing-the-Waters Communications
On October 21, 2020, the United States District Court for the Southern District of New York entered a final judgment on consent against Kik Interactive Inc. to resolve the Securities and Exchange Commission’s charges that...more
11/2/2020
/ Blockchain ,
Capital Raising ,
Cryptocurrency ,
Enforcement Actions ,
Initial Coin Offering (ICOs) ,
Securities and Exchange Commission (SEC) ,
Securities Violations ,
Simple Agreement for Future Tokens (SAFT) ,
Token Sales ,
Unregistered Securities ,
Virtual Currency
Finders play a vital role in introducing startups to potential investors. Yet the general requirement that persons soliciting investors must register with the Securities and Exchange Commission as broker-dealers and be...more
10/12/2020
/ Accredited Investors ,
Broker-Dealer ,
Comment Period ,
Exemptions ,
Financial Services Industry ,
Finders ,
Investment Adviser ,
Request For Information ,
Rule 506(c) ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Solicitation Provisions
The Securities Exchange Commission expanded the definition of “accredited investor” by adding new categories of investors that have sufficient investment knowledge and expertise to participate in private investment...more
Title III crowdfunding may be an attractive capital raising alternative during the current Coronavirus pandemic because it allows companies to use the internet to solicit potential investors and not be restricted to...more
Public companies stressing over how to meet filing deadlines during the COVID-19 crisis and what to say about the pandemic’s impact just received a filing reprieve and disclosure guidance from the SEC. The Securities and...more
It’s not often that an SEC Commissioner quotes Bruce Springsteen – not once, but twice – in a speech on securities regulation. But SEC Commissioner Hester Peirce did just that in a February 6, 2020 speech in which she...more
3/2/2020
/ Cryptocurrency ,
Digital Currency ,
Exempt Transactions ,
Initial Coin Offering (ICOs) ,
Offerings ,
Proposed Rules ,
Regulatory Agenda ,
Rulemaking Process ,
Safe Harbors ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Token Sales ,
Unregistered Securities