Securities Law

Securities Law

Congress Codifies New Resale Exemption

On December 4, 2015, President Obama signed into law the Fixing America’s Surface Transportation Act (“FAST Act”), which includes several securities law related provisions.  Among the most notable of these provisions is the addition of new Section 4(a)(7) to the Securities Act of 1933, which essentially codifies the so-called “Section 4(a)(1-1/2)” exemption for private resales of restricted securities.  With certain exceptions, the new Section 4(a)(7) exempts from registration any resale transaction that meets the following requirements:

  • Each purchaser is an accredited investor;
  • No general solicitation occurs; and
  • In the case of an issuer that is not a reporting company, the issuer makes available (at the request of the seller) to the seller and the prospective purchaser certain information about the issuer and the securities.
By |December 7th, 2015|Securities Law|

SEC Proposes Amendments to Reg ATS

The SEC last week proposed amendments to Regulation ATS to enhance operational transparency and regulatory oversight of alternative trading systems (ATS’s) that trade stocks listed on a national securities exchange (NMS stocks), including “dark pools.”  The proposed amendments can be found here: http://www.sec.gov/rules/proposed/2015/34-76474.pdf.

By |November 23rd, 2015|Securities Law|

SEC Adopts Crowdfunding Rules and Proposes Amendments to Rule 504

The SEC today adopted Regulation Crowdfunding, permitting individuals to invest in securities-based crowdfunding transactions.  The new crowdfunding rules will be effective in May 2016.  The SEC also proposed amendments to Rule 504 to increase the aggregate amount of money that may be offered and sold pursuant to the rule from $1 million to $5 million and to apply bad actor disqualifications to Rule 504 offerings.  The SEC’s press release, with links to the final and proposed rules, can be found here: http://www.sec.gov/news/pressrelease/2015-249.html.

By |October 30th, 2015|Securities Law|

SEC Adopts Regulation A+

As required by the JOBS Act, the SEC today adopted new rules that update and expand Regulation A, an existing exemption from registration for smaller issuers of securities.  The updated exemption, commonly referred to as “Regulation A+,” will enable smaller companies to offer and sell up to $50 million of securities in a 12-month period, subject to eligibility, disclosure and reporting requirements.  The final rule can be found here: http://www.sec.gov/rules/final/2015/33-9741.pdf.

By |March 25th, 2015|Securities Law|

SEC Issues 21(a) Report Concerning Auditor Independence

The SEC last week issued a 21(a) Report concerning auditor independence in the context of loaned staff arrangements.  The report arose out of an investigation into KPMG’s practice of loaning non-manager level professionals to certain audit clients to perform junior level tasks related to tax compliance.  A typical task performed by the loaned staff was inputting data into federal or state tax returns using an audit client-issued computer while being supervised by a member of the client’s tax department.  KPMG’s internal guidance specifically allowed these types of arrangements.

The issue was whether KPMG’s practice of loaning staff to audit clients to perform tax work violated Rule 2-01 of Regulation S-X, which prohibits, among other things, an independent auditor from “acting as an employee” of an audit client.  In its Report, the SEC, suggesting strongly that KPMG’s practice did violate Rule 2-01, reiterated its statement from a 2000 release that “an auditor who provides services in a way that is tantamount to accepting an appointment as an … employee of the audit client cannot be expected to be independent in auditing the financial consequences of management’s decisions.”  The SEC went on to make the following additional points:

  • An auditor may not provide otherwise permissible non-audit services (such as tax services) to an audit client in a manner that is inconsistent with other provisions of the independence rules (such as the prohibition against acting as an employee of the audit client).
  • An accountant acting as an employee of the audit client need not perform any decision-making, supervisory, or ongoing monitoring functions for the audit client for Rule 2-01 to be implicated.
  • In assessing whether an accountant is “acting” as an employee, a key factor is the degree of control that the audit client […]
By |January 27th, 2014|Securities Law|

Recent Developments in SEC Enforcement and Regulation

This article was originally published in The Colorado Lawyer, February 2014, Vol. 43, No. 2.

The Colorado Lawyer
February 2014
Vol. 43, No. 2 [Page  21]
© 2014 The Colorado Lawyer and Colorado Bar Association. All Rights Reserved.All material from The Colorado Lawyer provided via this World Wide Web server is copyrighted by the Colorado Bar Association. Before accessing any specific article, click here for disclaimer information.
Business Law

 

Recent Developments in SEC Enforcement and Regulation
by Jeffrey R. Thomas

 

Business Law articles are sponsored by the CBA Business Law Section to apprise members of current substantive law. Articles focus on business law topics for the Colorado practitioner, including antitrust, bankruptcy, business entities, commercial law, corporate counsel, financial institutions, franchising, and securities law.


Coordinating Editors

David P. Steigerwald of Sparks Willson Borges Brandt & Johnson, P.C., Colorado Springs—(719) 475-0097, dpsteig@sparkswillson.com; Curt Todd, Denver—(303) 955-1184, ctodd@templelaw.comcastbiz.net (Bankruptcy Law)

About the AuthorJeffrey R. Thomas is the founder of Thomas Law LLC in Denver. His practice focuses on securities disputes and regulation, internal investigations, civil litigation, employment law, and corporate law—(303) 898-3124, jthomas@thomaslawllc.com.

This article discusses recent developments in SEC enforcement and regulation, including adopted and proposed SEC rules, SEC Reports of Investigation, and SEC speeches and statements.

A number of important developments in the area of U.S. Securities and Exchange Commission (SEC) enforcement and regulation occurred in 2013.1 Among other things, the SEC continued to propose and adopt rules implementing provisions of the Dodd-Frank and JOBS Acts, issued three Reports of Investigation, and adopted a new settlement policy. This article discusses these […]

By |January 24th, 2014|Securities Law|

SEC Temporarily Stays Final Rule on Registration of Municipal Advisors

The SEC today temporarily stayed Exchange Act Rules 15Ba1-1 through 15Ba1-8 and Rule 15Bc4-1 and Forms MA, MA-I, MA-W, and MA-NR until July 1, 2014.  The effective date for the Rules and Forms was January 13, 2014.  Additional details can be found here: http://www.sec.gov/rules/final/2014/34-71288.pdf

By |January 13th, 2014|Securities Law|

FINRA Publishes 2014 Regulatory and Exam Priorities

On January 2, 2014, FINRA published its ninth annual Regulatory and Examination Priorities Letter to highlight significant risks and issues that could adversely affect investors and market integrity in the coming year.  Among the issues identified by FINRA were suitability of recommendations to retail investors of complex products, general solicitation and advertising of private placements, and crowdfunding portals.  The Letter can be found here: http://www.finra.org/web/groups/industry/@ip/@reg/@guide/documents/industry/p419710.pdf

 

By |January 9th, 2014|Securities Law|

SEC Announces Enforcement Results for FY 2013

The SEC yesterday announced its enforcement results for FY 2013, which ended in September.  The amount of disgorgement and penalties the SEC obtained increased from $3.1 billion in FY 2012 to $3.4 billion in FY 2013–an approximately 10% increase.  The number of enforcement actions the SEC brought, however, declined from 734 in FY 2012 to 686 in FY 2013–an approximately 7% decline.  Notably, the SEC does not collect all disgorgement and penalties for which it obtains orders.

By |December 18th, 2013|Securities Law|

Financial Regulators Adopt “Volcker Rule”

Today, five financial regulators – Department of Treasury, Federal Reserve, FDIC, SEC, and CFTC – approved the long-awaited “Volcker Rule.”  The Rule implements Section 13 of the Bank Holding Company Act of 1956, which was added by Section 619 of the Dodd-Frank Act.  The Rule generally prohibits banks with federally-insured deposits from engaging in proprietary trading or taking ownership stakes in hedge funds or private equity funds.  Exemptions exist for, among other things, market making activities, hedging activities, and trading in U.S. government bonds.

By |December 10th, 2013|Securities Law|