Securities Lawyer 101 l Brenda Hamilton

Securities Lawyer 101 l Brenda Hamilton

Monday, December 30, 2013

Crowdfunding 101 Q & A

Crowdfunding 101 Q & A

Crowdfunding 101 Q & A

Crowdfunding 101 Q & A

Crowdfunding 101 Q & A

Solutions for DTC Chills & Global Locks

Solutions for DTC Chills & Global Locks

Solutions for DTC Chills & Global Locks

Celebrity Broker Bambi Holzer Barred by FINRA

Celebrity Broker Bambi Holzer Barred by FINRA

Celebrity Broker Bambi Holzer Barred by FINRA

Crowdfunding 101

Crowdfunding 101

Research Analysts and Underwriters After the JOBS Act l Going Public 101 Blog

Research Analysts and Underwriters After the JOBS Act l Going Public 101 Blog

Research Analysts and Underwriters After the JOBS Act l Going Public 101 Blog

Research Analysts and Underwriters After the JOBS Act l Going Public 101 Blog

Research Analysts and Underwriters After the JOBS Act l Going Public 101 Blog

Research Analysts and Underwriters After the JOBS Act l Going Public 101 Blog

The JOBS Act’s Amendments to Form D

The JOBS Act’s Amendments to Form D

The JOBS Act’s Amendments to Form D

SEC Comments 101

SEC Comments 101

SEC Comments 101

Friday, December 27, 2013

SEC Seeks Comment On DTC Proposals

SEC Seeks Comment On DTC Proposals

Secondary Offerings In Going Public Transactions

Secondary Offerings In Going Public Transactions

Secondary Offerings In Going Public Transactions

Secondary Offerings In Going Public Transactions

Secondary Offerings In Going Public Transactions

Secondary Offerings In Going Public Transactions

Friday, December 20, 2013

SEC Charges Caroline Winsor,Richard Walchuk, Lance Bauerlein and Lisa Esposito

SEC Charges Caroline Winsor,Richard Walchuk, Lance Bauerlein and Lisa Esposito

SEC Charges Caroline Winsor,Richard Walchuk, Lance Bauerlein and Lisa Esposito

SEC Charges Caroline Winsor,Richard Walchuk, Lance Bauerlein and Lisa Esposito

SEC Charges Caroline Winsor,Richard Walchuk, Lance Bauerlein and Lisa Esposito

SEC Charges Caroline Winsor,Richard Walchuk, Lance Bauerlein and Lisa Esposito

SEC Charges Lance Berger In Connection With FUEG

SEC Charges Lance Berger In Connection With FUEG

SEC Charges Lance Berger In Connection With FUEG

The SEC Suspends The Enlightened Gourmet Inc.

The SEC Suspends The Enlightened Gourmet Inc.

The SEC Suspends The Enlightened Gourmet Inc.

The SEC Suspends The Enlightened Gourmet Inc.

The SEC Suspends The Enlightened Gourmet Inc.

The SEC Suspends The Enlightened Gourmet Inc.

SEC Releases Regulation A Proposals

SEC Releases Regulation A Proposals

Restricted Securities And Restricted Legends

Restricted Securities And Restricted Legends

Restricted Securities And Restricted Legends

Thursday, December 19, 2013

Section 3(a)(10) l The Paper Crime Exemption

Section 3(a)(10) l The Paper Crime Exemption

Section 3(a)(10) l The Paper Crime Exemption

The SEC's Enforcement Results for 2013

The SEC's Enforcement Results for 2013

The SEC's Enforcement Results for 2013

SEC Reporting 101

SEC Reporting 101

Wednesday, December 18, 2013

SEC Releases Regulation A Proposals

SEC Releases Regulation A Proposals

SEC Releases Regulation A Proposals

The Laws That Apply to Finders

The Laws That Apply to Finders

The Laws That Apply to Finders

The Laws That Apply to Finders

The Laws That Apply to Finders

Tuesday, December 17, 2013

Rule 506(C) Verification of Accredited Investor Status

Rule 506(C) Verification of Accredited Investor Status

Rule 506(C) Verification of Accredited Investor Status

There are several methods a private company may use in a going public transaction. Filing a registration statement with the Securities and Exchange Commission (“SEC”) subjects the company to the reporting requirements of the Securities Act of 1933, as amended (“Securities Act”), depending on the form chosen.  One method of going public is by conducting an Initial Public Offering (“IPO”).  The traditional IPO is rarely used by small companies as most will not  meet the eligibility requirements to trade on a national securities exchange such as  the New York Stock Exchange (“NYSE”) Euronext, NASDAQ, or NYSE MKT (formerly Amex). Moreover, traditional IPO process takes time and money most small companies are unable or unwilling to commit.

The Laws That Apply to Finders



Companies seeking capital are frequently approached by finders who offer to locate investors in exchange for a fee.  This is particularly true in going public transactions. Most finders are not registered as broker-dealers with the Securities and Exchange Commission (the “SEC”).
The possibility of receiving capital even through the efforts of a finder creates a tempting opportunity for issuers who need capital.

Form S-8 Q & A


 
A. Form S-8 (“Form S-8”) is a short-form registration statement under the Securities Act of 1933, as amended (the “Securities Act”).
 
Q. Can all Companies register a securities offering on Form S-8?
 
A. Form S-8 can only be used by companies that file reports under Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”). In order to register securities on Form S-8, the Company  must have filed all reports and other materials required to be filed by Section 13 or Section 15(d) of the Exchange Act during the preceding 12 months or for such shorter period that it was required to file such reports and materials.

Restricted Securities

It has become routine for public companies and private companies seeking to go public to place restrictive legends (“Restrictive Legends” on the certificates representing their Restricted Securities not covered by a registration statement under the Securities Act of 1933, as amended (the “Securities Act”). The Securities Act does not require that issuers place restrictive legends (“Restrictive Legends”) on certificates representing restricted securities.   It has become routine for public companies and private companies seeking to go public to place Restrictive Legends on the certificates representing their Restricted Securities not covered by a registration statement under the Securities Act. It is also a routine matter for an issuer’s transfer agent to require that Restrictive Legends be prominently placed on stock certificates representing restricted securities.

SEC Reporting 101

SEC Reporting 101

SEC Reporting 101

SEC Reporting 101

SEC Reporting  101
An issuer with a class of securities registered under Section 12 or subject to Section 15(d) of the Securities Exchange Act of 1934  must file periodic reports with the Securities and Exchange Commission pursuant to Section 13(a) and Section 15(d). The SEC requires a review of an issuer’s periodic reports at least once every three years and may review an issuer’s reports more often if it files a registration statement under the Securities Act, as a part of a review of the registration statement.

Investing In EB-5 Offerings

Investing In EB-5 Offerings

Investing In EB-5 Offerings

Raising Capital l Regulation S l Foreign Private Issuers

Raising Capital l Regulation S l Foreign Private Issuers

Sunday, December 15, 2013

SEC Halts Oil And Gas Scheme

SEC Halts Oil And Gas Scheme

Section 3(a)(10) l The Paper Crime Exemption

Section 3(a)(10) l The Paper Crime Exemption

SEC Halts Oil And Gas Scheme

Boiler Rooms Are Back in Style

Boiler Rooms Are Back in Style

Boiler Rooms Are Back in Style

Section 3(a)(10) l The Paper Crime Exemption

Section 3(a)(10) l The Paper Crime Exemption

Section 3(a)(10) l The Paper Crime Exemption

Saturday, December 14, 2013

The Securities Exchange Act of 1934

The Securities Exchange Act of 1934

The Securities Exchange Act of 1934

The Emerging Growth Company

The Emerging Growth Company

The Emerging Growth Company

Getting Funded 101

Getting Funded 101

Getting Funded 101

Tuesday, December 10, 2013

SEC Grants Waiver Of Rule 506 Bad Actor Rule

SEC Grants Waiver Of Rule 506 Bad Actor Rule

SEC Grants Waiver Of Rule 506 Bad Actor Rule

OTCMarkets OTCQB

Many issuers seeking to go public are opting to list on the OTCMarkets OTCQB.   The OTCMarkets Group operates an electronic inter-dealer quotation system called OTC Link. OTCMarkets ranks issuers in tiers; each issuer’s rank depends upon the amount of disclosure provided.
Companies using registration statements followed by Rule 15c2-11 applications to go public qualify for the “OTCQB” tier. The QTCQB tier is only available to issuers who file reports with the SEC. These issuers are not required to provide additional disclosures to the OTCMarkets.
In order for an issuer to go public on the OTCQB, it must become an SEC reporting company.  Once the company is reporting, it can then obtain its ticker symbol assignment from the Financial Industry Regulatory Authority (“FINRA”) if it meets certain requirements.
SEC Reporting l OTCQB Going Public Transactions
A private company seeking to go public can voluntarily become reporting either by filing a Form 10 registration statement to register a class of securities under the Securities Exchange Act of 1934, as amended (the “1934 Act”) or by registering securities on a registration statement under the Securities Act of 1933, as amended (the “1933 Act”), typically on Form S-1. All companies qualify to file a registration statement on Form S-1.
Once a private company’s registration statement becomes effective, the company is an SEC reporting issuer, but its stock cannot yet be publicly traded. First it must comply with Rule 15c2-11 (“SEC Rule 15c2-11”) of the 1934 Act.
15c2-11 Requirements for OTCQB  Going Public Transactions
In order to use 15c2-11 to go public and have its shares publicly traded, the private company must locate a sponsoring market maker who is a FINRA member to file an application on its behalf.
The FINRA Comment Process in OTCQB Going Public Transactions
FINRA may render comments to the Form 211 application; the sponsoring market maker and company must respond to the satisfaction of FINRA. Once FINRA is satisfied that the disclosures satisfy the requirements of SEC Rule 15c2-11, a trading symbol will be assigned and the company will have completed its going public transaction. The market maker can quote the company’s securities on the OTCMarkets OTCQB tier.
The sponsoring market maker has the exclusive right to publish quotations for the security of the company going public for the initial 30 day period after the Form 211 is approved. After that, other market makers can “piggyback” on his Form 211, and publish their own quotations.
A list of market makers who file 15c-211 applications can be obtained from the OTCMarkets website at www.otcmarkets.com.
15c2-11 Disclosure Requirements in OTCQB Going Public Transactions
The disclosures required by Rule 15c2-11 are provided on the Form 211 submitted by the sponsoring market maker. FINRA requires specific disclosures in the Form 211 and in the Information and Disclosure Statement, which includes much of the same information found in an SEC Registration Statement.
FINRA Rules Applicable to the Going Public Process
SEC Rule 15c2-11 requires that current public information be made available to investors. This information is initially provided on Form 211 and in the 15c2-11 application to FINRA. The sponsoring market maker must review basic issuer information prior to publishing quotations of an issuer’s securities. FINRA also requires that market makers have a reasonable basis for believing the information provided by the company is accurate and from reliable sources. A private company that goes public and becomes an SEC reporting issuer satisfies the ongoing current public information requirement by filing its forms and reports with the SEC.
Qualifying for OTCMarkets’ OTCQB provides transparency to investors and is a straightforward method for small companies to go public, and to enjoy the benefits that status confers.
More information about going public using SEC registration can be found on our blog post at:
For further information about this article, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton Florida, (561) 416-8956, by email at bhamilton@securitieslawyer101.com. This memorandum is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information concerning the rules and regulations affecting the use of Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504 offerings, Rule 144, SEC reporting requirements, SEC registration on Form S-1 and Form 10, Pink Sheet listing, OTCBB and OTC Markets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, go public direct transactions and direct public offerings please contact Hamilton and Associates or visit http://www.gopublic101.com.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.GoPublic101.com

The Emerging Growth Company


The issuer may not sell the securities covered by the registration statement until the SEC staff declares the registration statement “effective.”   The disclosures required by the 1933 Act vary depending upon if the issuer qualifies as an emerging growth company and whether the company previously engaged in a reverse merger with a public shell company.
An issuer will qualify as an emerging growth company under the JOBS Act if its total annual gross revenues are less than $1 billion during its most recently completed fiscal year and if, as of December 8, 2011, the issuer had not sold equity securities under a registration statement.
A company that completes its going public transaction will continue to be considered an emerging growth company for the first five fiscal years after it completes an IPO, unless:
♦ its total annual gross revenues are $1 billion or more;
♦ it has issued more than $1 billion in non-convertible debt in the past three years; or
♦ it becomes a “large accelerated filer,” as defined in Exchange Act Rule 12b-2.
Registration Statement Requirements
Companies that go public, whether emerging growth companies or not, should familiarize themselves with the disclosures required in an SEC Registration Statement.
There are two principal parts to SEC registration statements. Part I is the prospectus, the legal offering or “selling” document. In it, the company filing the statement must disclose important facts about its business operations, financial condition, results of operations, risk factors, and management. It must also include audited financial statements. The prospectus must be delivered to everyone who buys the securities, as well as anyone who is made an offer to purchase them.
Part II of the registration statement contains additional information that the company need not deliver to investors but must file with the SEC, such as copies of material contracts.
Form S-1
All companies may use SEC Form S-1 to register a securities offering, including companies conducting direct public offerings as part of a going public transaction. Form S-1 requires specified disclosures in the prospectus. Among them are:
♦ a description of the company’s business, properties, and competition;
♦ a description of the risks of investing in the company;
♦ a discussion and analysis of the company’s financial results and financial condition;
♦ the identity of the company’s officers and directors and their compensation;
♦ a description of material transactions between the company and its officers, directors, and significant shareholders;
♦ a description of material legal proceedings involving the company and its officers and directors; and
♦ a description of the company’s material contracts.
A company filing a registration statement must also provide disclosures about the securities offering, including:
♦ a description of the securities being offered;
♦ the plan for distributing the securities; and
♦ the intended use of the proceeds of the offering.
The financial statements of U.S. companies must comply with the form and content requirements of Regulation S-X.
Annual reports must be audited by an independent certified public accountant registered with the Public Company Accounting Oversight Board (“PCAOB”), which regulates public accounting firms that audit financial statements filed with the SEC.
Companies must provide all information necessary to ensure that disclosures are not false or misleading.
Emerging Growth Companies
The JOBS Act created a new category of issuer known as the “emerging growth company.”  If a company meets the requirements of the emerging growth company status as defined in Section 2(a)(19) of the Securities Act, it may elect to provide reduced disclosures that are scaled for newly public companies under the JOBS Act.
Emerging growth companies may:
♦ follow the smaller reporting company requirements for disclosure and audited financial statements;
♦ not have to provide an auditor attestation of internal control over financial reporting under Sarbanes-Oxley Act Section 404(b); and
♦ choose not to become subject to certain changes in accounting standards.
Confidential Filing for Emerging Growth Companies as Defined by the JOBS ACT
Registration statements filed with the SEC can be viewed by anyone using the SEC’s EDGAR system by going to the SEC’s website. If a company is an emerging growth company it can make its initial filings on a confidential basis, until the review process is completed. When SEC comments and questions have been satisfactorily resolved, the final version of the registration statement will be published on EDGAR.
More information on the process for SEC registration statements is available at:
For further information about this article, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton Florida, (561) 416-8956, by email at info@gopublic101.com or visit www.gopublic101.com. This memorandum is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information concerning the rules and regulations affecting the use of Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504 offerings, Rule 144, SEC reporting requirements, SEC registration on Form S-1 and Form 10, Pink Sheet listing, OTCBB and OTCMarkets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, go public direct transactions and direct public offerings or please contact Hamilton and Associates at (561) 416-8956 or by email at info@gopublic101.com. Please note that the prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.GoPublic101.com

Friday, December 6, 2013

FINRA Review Under Rule 6490

FINRA Review Under Rule 6490

FINRA Review Under Rule 6490

The Registration Statement Quiet Period l Going Public Bootcamp

Companies going public by filing a registration statement on Form S-1 are often unaware of the securities laws that apply to the ”quiet period” of the Securities and Exchange Commission (“SEC”).   The federal securities laws do not define the term “quiet period”. The quiet period extends from the time a company files a registration statement with the SEC until the SEC’s staff declares the registration statement effective. During the quiet period, federal securities laws limit what information a company and its agents can release to the public. The failure to comply with the SEC’s requirements is known as “gun-jumping.”

Risks of Finders in Going Public Transactions

With current economic conditions more and more public companies seeking capital and private companies seeking to become public are using the services of intermediaries or finders.   “Finders” are intermediaries that bring parties together for potential business opportunities. For a public or private company this may mean introducing the company to an investor. For a private company seeking to go public, a finder may be used to locate a public shell for a reverse merger transaction to enable the private company’s securities to become publicly traded.  The use of a finder often involves activities requiring the finder to register as a broker-dealer, including those activities related to reverse merger transactions designed to take a private company public. Issuers and finders should be aware of the activities that require broker-dealer registration and the potential consequences associated with using or acting as an unregistered finder.

The DPO Premier Going Public Solution

The direct public offering (“Direct Public Offering”) has become the premier method used in going public transactions.   A Direct Public Offering allows a company to publicly offer and sell unrestricted securities directly to investors without the use of an underwriter. With a Direct Public Offering, the company files a registration statement with the Securities and Exchange Commission (“SEC”) to register a securities offering under the Securities Act of 1933, as amended (the “Securities Act”).
Typically, in going public transactions Form S-1 (”S-1”) registration statements are used.  A company can use a Form S-1 registration statement to register securities on its own behalf in an initial public offering, register securities on behalf of its selling security holders in a secondary offering or register securities on its own behalf as well as for its selling security holders.

NASDAQ & NYSE Corporate Governance

The Dodd-Frank Act added Section 10C to the Securities Exchange Act of 1934, as amended (the Exchange Act), which requires that the SEC adopt rules directing securities exchanges to prohibit the listing of any equity security of an issuer that is not in compliance with Section 10C’s compensation committee and compensation adviser requirements. On June 20, 2012, the SEC adopted Final Rules implementing the Section 10C requirements.
On September 26, 2012, the New York Stock Exchange (NYSE) and the NASDAQ Stock Market (NASDAQ) proposed amendments to their corporate governance listing standards for compensation committee and adviser independence requirements. The proposals were directed by the Securities and Exchange Commission (SEC), which implements Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act.
Certain NASDAQ’s proposed rules relating to compensation committee responsibility and authority will become effective upon SEC approval. The NYSE and NASDAQ proposed rules are scheduled to be adopted by the SEC prior to June 27, 2013.  As a result, the proposed rules may not be applicable in the upcoming 2013 proxy season for companies with a December 31 year end.

Prospectus Delivery Requirements

Under the Securities Act of 1933 as amended (the “Securites Act”),  a Company that conducts an initial public offering (“IPO”) including in a going public transaction must adequately disclose material information to investors. These disclosures include details of the Company’s business and financial condition as well as the securities the Company proposes to offer.
In going public transactions, these disclosures are most often provided in a Form S-1 Registration Statement.   Upon effectiveness of its S-1 registration statement, the Company provides potential investors with a prospectus which forms a part of the registration statement.  The prospectus contains two parts.

JOBS Act- Research Analysts and Underwriters

On September 28, 2012, the Financial Industry Regulatory Authority, Inc. (“FINRA”) proposed rule changes to the Securities and Exchange Commission (the “SEC”), for Rule 2711. The proposals are pursuant to the requirements of the Jumpstart Our Business Startups Act (the “JOBS Act”).
Analyst Communications
NASD Rule 2711(c)(4) and NYSE Rule 472(b)(5) presently prohibit research analysts from participating in communications with companies for the purpose of soliciting investment banking business or pitches aimed at such business.

Going Public Law


In the wake of the stock market crash of 1929, Congress decided that something needed to be done to rein in our unregulated capital markets, with a view to preventing another similar disaster.  The first laws passed were contained in the Securities Act of 1933 (the “Securities Act”).  That was followed quickly by the Securities and Exchange Act of 1934 (the “Exchange Act”).
Together, the two are the foundation of our securities regulations, and have been amended continuously to reflect changing times, changing financial instruments, and changing markets.

Issues Affecting the Microcap Markets

Issues Affecting the Microcap Markets
The perspective of a practicing securities attorney is often influenced by the securities laws and regulations and his or her personal experiences within their profession. In order to provide a practitioner’s perspective of current issues involving microcap stocks, we discussed securities transactions with a practicing securities attorney named Brenda Lee Hamilton from Hamilton & Associates Securities Law Group in Boca Raton, Florida. Brenda Hamilton has graciously offered to share her expertise with our readers. Brenda’s practice is focused primarily in the areas of securities regulation and compliance, going public transactions, and initial and direct public offerings. She has extensive experience assisting in going public transactions, counseling public and private compa­nies about the securities laws.

Rule 504 Insights



Rule 504 of Regulation D (“Rule 504″) is a transactional exemption from the registration Statement requirements of the Securities Act of 1933, as amended (the “Securities Act”) for non-reporting companies when they offer and sell securities.  OTC Pink Sheet companies often rely upon Rule 504 to offer and sell their securities.
OTC Pink Sheet Issuer Eligibility under Rule 504
Rule 504 is only available to a company of securities and therefore is not available for the re-sale of securities by a shareholder who holds or owns a security. The Rule 504 is only available to a company that is a SEC reporting company (i.e., the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “1934 Act”); an investment company; or a “Shell Company” (i.e., a development stage company that either has no specific business plan or purpose or has indicated that its business plan is to enter into a merger or acquisition with an unidentified company or companies or other entity).

FINRA Review Under Rule 6490

FINRA Rule 6490, enacted over two years ago requires issuers of securities not listed on exchanges to provide timely notice to FINRA of certain corporate actions. Rule 6490 applies to corporate name changes, forward stock splits, reverse stock splits, distributions of cash or securities such as dividends, stock splits, rights, subscription offerings and other corporate actions. 
FINRA Rule 6490 codifies Rule 10b-17 of the Securities Exchange Act.  These include issuers who go public direct and conduct underwritten or direct public offerings, as well as  those that pursue reverse mergers with public shells.

SEC Report Reveals $439,000,000 Remains For Bounties



The SEC’s 2013 Annual Report to congress on the Dodd-Frank whistleblower Program shows whistleblowers from 55 countries submitted tips to the SEC.
Under the SEC’s whistleblower program, if a whistle-blower’s information leads to an enforcement case where more than $1 million is collected, the whistleblower could receive 10 percent to 30 percent of the amount collected.  In 2013, the SEC awarded a notable $14 million bounty to an anonymous whistleblower.

Regulation M and SEC Enforcement


Recently, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) issued guidance concerning Rule 105 (“Rule 105″) of Regulation M of the Securities Exchange Act of 1934, as amended.  Rule 105 prohibits the purchase of securities in a secondary offering if the purchaser has a short position of the same securities established during a specified restricted period. A short sale is defined as the “sale of a security which the seller does not own or any sale which is consummated by the delivery of a security borrowed by, or for the account of, the seller.”