Practice

SECURITIES REGULATION, COMPLIANCE AND FILINGS

The number of regulatory and legal hurdles facing entrepreneurs who wish to build a business with the eventual goal of going public can seem daunting. Our Law Firm helps guide companies through the legal and regulatory.

Our Law Firm has significant expertise in drafting, filing and obtaining effective SEC registration statements and counseling clients on SEC compliance issues, including the Sarbanes-Oxley Act of 2002 and the 1934 Exchange Act periodic reporting obligations. With the introduction of the Sarbanes-Oxley Act of 2002, public companies with securities traded on Nasdaq, NYSE, AMEX, OTCBB, Pink Sheets, etc. are subject to increased disclosure and corporate governance requirements. Our representation of public companies over the years has allowed us to obtain knowledge and experience with these requirements and with the SEC registration and reporting requirements. Our experience also allows us to effectively counsel companies on compliance with state Blue Sky laws and other securities law issues such as reorganizations, recapitalizations, board of director and shareholder issues, and employee stock option plans (ESOPs).

Our Law Firm also represents issuers in assisting FINRA registered broker/dealers in the Form 211 process to obtain stock quotations on the Over the Counter Bulletin Board (OTCBB) and Pink Sheets, and with national exchange listing applications and regulations for Nasdaq, NYSE and AMEX.
 

REPRESENTING PUBLIC COMPANIES
 

Our Law Firm counsels and represents public companies and their shareholders, directors and officers in connection with a wide range of federal and state securities regulation matters, including securities filings, public offerings, private placements of securities, and mergers and acquisitions, including "going public" transactions.

Among the services our Law Firm provides are:
 

  • Preparing and filing periodic 10-Q and 10-K filings, 8-K filings, proxy and information statements 
  • Preparing and filing Form 10 registration statements which a non-reporting company files to become a reporting company with the SEC 
  • Preparing and filing Nasdaq, NYSE and AMEX listing applications 
  • Preparing Form 211 required for a client's stock to be quoted on the OTC Bulletin Board or Pink Sheets 
  • Advising on 10b-5 stock plans and preparing Section 13 and Section 16 filings 
  • Structuring employee stock option plans, including Form S-8 registration statements 
  • Monitoring of financial public relations which includes the drafting and reviewing of press releases and ensuring their distribution through the appropriate news service and/or public relations firm 
  • Advising clients on a variety of other securities and corporate related matters
     

PRIVATE SECURITIES SERVICES

SEC Regulation D Offering Services
Fund Development and Compliance
Other Exempt Securities Offering Services
Other Exempt Securities Services
Private Securities Litigation

PRIVATE SECURITIES OVERVIEW

Raising money for a business or other profit-motivated venture almost always involves securities law issues because the federal definition of a "security" is so broad: "The term 'security' means any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, pre-organization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a 'security,' or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing." 15 U.S.C. §77b(a)(1).

 
Both Section 2(1) of the Securities Act of 1933 and Section 3(a)(10) of the Securities Exchange Act of 1934 include "investment contract" in their definitions of a "security." 15 U.S.C. §§ 77b(a)(1) and 78c(a)(10). "The term 'investment contract' has been one of the means employed to bring `instruments of more variable character' within the scope of the federal securities laws." Youmans v. Simon, 791 F.2d 341, 345 (5th Cir. 1986) (quoting Landreth Timber Co. v. Landreth, 471 U.S. 681, 686, 105 S. Ct. 2297 (1985). The Supreme Court in SEC v. W.J. Howrey Co. defined an investment contract as "a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party." 328 U.S. 293, 298-99; 66 S. Ct. 1100 (1946).
 
Section 5 of the Securities Act of 1933 requires that every security sold be registered with the Securities and Exchange Commission (“SEC”) or exempt from registration with the SEC. Securities registered for sale with the SEC are often referred to as being "publicly" offered and those sold pursuant to certain exemptions from registration are often referred to as being "privately" offered. Therefore, the term “private securities” generally means securities exempt from U.S. Securities and Exchange Commission registration requirements. These securities are not publicly offered, sold, or traded.
 
Following are the most common registration exemptions:
 
  • Intrastate Offering Exemption 
  • Private Offering Exemption 
  • Regulation A
  • Regulation D
  • Rule 504
  • Rule 505
  • Rule 506
  • Regulation S
  • Accredited Investor Exemption - Section 4(5)
  • California Limited Offering Exemption - Rule 1001
  • Exemption for Sales of Securities through Employee Benefit Plans - Rule 701

SEC REGULATION D OFFERING SERVICES

The Law Firm's Regulation D compliance legal services include, but are not limited to, any of the following:

  • Professional counsel and guidance regarding SEC Regulation D and the Rule 504, 505, or 506 private placement process; 
  • Preparation of entity formation and governance documents, such as an LLC Operating Agreement, Articles, Bylaws, and Partnership Agreement; 
  • Preparation of the required documents including a Confidential Private Placement Memorandum – a very comprehensive, detailed, well-written document describing the investment and providing all of the information required to assure the securities offering remains exempt from SEC registration; subscription documents – Suitability Questionnaire, Subscription Agreement, Instructions, Other; SEC Form D – Notice of Exempt Offering of Securities; and Form U2 – Uniform Consent to Service of Process (where required); 
  • Review, comment, and guidance regarding a pre-existing private placement memorandum; 
  • A memorandum very thoroughly explaining the Regulation D private securities placement law and the Rule 504, 505, or 506 process; 
  • State filing assistance; 
  • Due diligence reports; 
  • Opinion letters; and 
  • Ongoing support
 
The Regulation D offering package applies to non-fund private placements and includes thorough instruction in the law and procedure; professionally drafted documents including a private placement memorandum, complete subscription package, and Form D; and assistance identifying and presenting the opportunity to prospective investors. The fee is time-based.
 
Additional information:
 
  • Fees for other or a la carte Regulation D services are either time-based, with a deposit and any further invoices payable upon receipt, or fixed in an amount depending upon the service(s). 
  • The Law Firm does not charge or require reimbursement of any ordinary expenses (printing, mailing, telephone, etc.) related to these legal services. 
  • The client will have to directly pay any required state fees when filing a notice of sale and/or consent – these fees vary from state-to-state. 
 
OTHER EXEMPT SECURITIES OFFERING SERVICES
 
The Law Firm provides legal representation for other exempt securities, including the Intrastate Offering Exemption, Private Offering Exemption, Regulation A, Accredited Investor Exemption - Section 4, Regulation S - Rules Governing Offers and Sales Made Outside the United States Without Registration Under the Securities Act of 1933. These legal services include, but are not limited to, any of the following:
 
  • Professional counsel and guidance regarding the private placement process; 
  • Preparation of entity formation and governance documents, such as an LLC Operating Agreement, Articles, Bylaws, and Partnership Agreement; 
  • Preparation of the required documents including a Confidential Private Placement Memorandum; subscription documents – Suitability Questionnaire, Subscription Agreement, Instructions; SEC Form D – Notice of Exempt Offering of Securities; Form 1-A Regulation A Offering Statement under the Securities Act of 1933; and Form U2 – Uniform Consent to Service of Process (where required); preparation of registration documents (e.g., Regulation A) and representation through the process; 
  • Review, comment, and guidance regarding a pre-existing private placement memorandum; 
  • State filing assistance; 
  • Due diligence reports; 
 
OTHER EXEMPT SECURITIES SERVICES
 
The Law Firm provides a variety of other legal services related to SEC registration-exempt securities, including transfers under Rule 144, PIPE's, and due diligence reports.
 
PRIVATE SECURITIES AND BUSINESS LITIGATION
 
Carl A. Generes has extensive experience handling all facets of contested securities matters including representing public companies and their officers and directors in Securities and Exchange Commission investigations.
 
IN PARTICULAR
 
  • Securities and Exchange Commission enforcement proceedings—representation of issuers, officers and directors, and professionals in civil proceedings initiated by the SEC.
  • Defense of actions for securities fraud and misrepresentation—individual suits against issuers, directors, officers, underwriters, brokers, accountants, attorneys, investment companies and investment advisors under federal and state securities laws.
  • Derivative actions alleging breach of fiduciary duty and related torts—suits by derivative plaintiffs in federal and state courts asserting violations of the duty of loyalty and care by directors and officers.
  • Broker-Dealer litigation—representation of registered broker-dealers and investment advisors in state and federal actions, arbitrations, and proceedings before self-regulatory organizations.
  • Arbitration and mediation—representation of individual clients and broker-dealers in FINRA arbitrations.
  
PUBLIC & PRIVATE OFFERINGS
Our Law Firm assists clients in all types of securities offerings, including:
 
 
  • Initial public offerings 
  • Secondary offerings 
  • Convertible debenture and preferred stock offerings
  • Listings on all stock exchanges and the OTCBB and Pink Sheets 
  • Debt issuances 
  • Bridge financings
  • PIPEs (private investment in public equity) 
  • Employee stock option and stock ownership plans 
  • Reverse mergers

Additionally, we handle all SEC compliance filings and state Blue Sky securities regulations.Securities offerings provide growing companies with access to public and private equity markets.