US SEC approves amendments to Nasdaq’s 20 per cent rule for shareholder approval of certain private offerings

2019 ◽  
Vol 20 (1) ◽  
pp. 1-4 ◽  
Author(s):  
Justin F. Hoffman ◽  
Jude A. Dworaczyk
Keyword(s):  
Design Methodology ◽  
Market Value ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
Book Value ◽  
The Us ◽  
Before And After ◽  
Private Placements ◽  
Practical Guidance ◽  
Definition Of

Purpose To explain a recent amendment by the US Securities and Exchange Commission (the SEC) to Nasdaq Rule 5635(d) (the 20 per cent Rule) to change the definition of “market value” for purposes of the 20 per cent Rule and eliminate the requirement for shareholder approval of certain private issuances at a price less than book value but greater than market value. Design/methodology/approach This article provides background on the purpose and policy behind the 20 per cent Rule and summarizes the provisions of the 20 per cent rule, both before and after the recent SEC amendment thereto. This article then highlights the most important changes to the 20 per cent Rule and explains the implications thereof for Nasdaq-listed issuers. Findings The amended 20 per cent Rule provides Nasdaq-listed issuers greater flexibility in structuring transactions involving private placements of equity and will likely reduce the number of such transactions requiring a shareholder vote. Originality/value Practical guidance from experienced corporate finance and capital markets lawyers.

SEC approves amendments to the NYSE’s substantial stockholder issuance rule and 20 per cent rule for shareholder approval of certain private offerings

2019 ◽  
Vol 20 (2) ◽  
pp. 16-19
Author(s):  
Justin Hoffman ◽  
Jude Dworaczyk
Keyword(s):  
New York ◽  
Listed Company ◽  
Market Value ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
Book Value ◽  
The Us ◽  
Before And After ◽  
Private Placements ◽  
Definition Of

Purpose To explain recent amendments by the US Securities and Exchange Commission (the SEC) to Sections 312.03(b) relating to issuances of securities to substantial stockholders (the Substantial Stockholder Issuance Rule) and 312.03(c) (the 20 Per cent Rule) of the New York Stock Exchange’s (the NYSE) Listed Company Manual to change the definition of “market value” for purposes of the 20 Per cent Rule and eliminate the requirement for shareholder approval of certain private issuances at a price less than book value but greater than market value. Design/methodology/approach This article provides background on the purpose and policy behind the Substantial Stockholder Issuance Rule and the 20 Per cent Rule and summarizes the provisions of each rule, both before and after the recent SEC amendments thereto. This article then highlights the most important changes to the Substantial Stockholder Issuance Rule and the 20 Per cent Rule and explains the implications thereof for NYSE-listed issuers. Findings The amended Substantial Stockholder Issuance Rule and the 20 Per cent Rule provide NYSE-listed issuers greater flexibility in structuring transactions involving private placements of equity and will likely reduce the number of such transactions requiring a shareholder vote. Originality/value Practical guidance from experienced corporate finance and capital markets lawyers.

A review of the SEC Participating Affiliate No-Action Letters’ relief from Investment Advisers Act of 1940 registration for foreign investment advisers

2017 ◽  
Vol 18 (4) ◽  
pp. 22-28 ◽  
Author(s):  
Wendy E. Cohen ◽  
David Y. Dickstein ◽  
Christian B. Hennion ◽  
Richard D. Marshall ◽  
Allison C. Yacker ◽  
...  
Keyword(s):  
Foreign Investment ◽  
Financial Services ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
The Us ◽  
Information Update ◽  
Practical Guidance ◽  
Investment Advisers

Purpose To explain the US Securities and Exchange Commission (the “SEC”) staff’s (the “Staff”) participating affiliate exemption from investment adviser registration for foreign advisers set forth in a line of Staff no-action letters issued between 1992 and 2005 (the “Participating Affiliate Letters”) and to discuss recent guidance issued by the Staff in an information update published in March 2017 (the “Information Update”) with respect to complying with requirements of the Participating Affiliate Letters. Design/methodology/approach Reviews the development of the Staff’s approach regarding the non-registration of foreign advisers that rely on the Participating Affiliate Letters from prior to the issuance of those letters through the Information Update and sets forth recommendations for registered investment advisers and their participating affiliates. Findings While there are arguments that the Information Update goes beyond restating established standards and does not clearly explain whether submission of all listed documentation is required, the Information Update will likely standardize the information submitted to the SEC. Originality/value Practical guidance for advisers relying on the Participating Affiliate Letters from experienced securities and financial services lawyers.

SEC approves amendment to FINRA IPO allocation rule 5131, easing compliance for fund investors

2014 ◽  
Vol 15 (1) ◽  
pp. 52-57 ◽  
Author(s):  
Charles S. Gittleman ◽  
Russell D. Sacks ◽  
Jennifer D. Morton
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Allocation Rule ◽  
Content Type ◽  
The Us ◽  
Practical Guidance

Purpose – The purpose of the paper is to describe the recent amendments to FINRA's IPO Allocation Rule that were approved by the US Securities and Exchange Commission. Design/methodology/approach – The paper provides a description of the IPO Allocation Rule and its operation, followed by a description of the IPO Allocation Rule amendments recently amended. Findings – On November 27, 2013, the Securities and Exchange Commission approved a change to FINRA's IPO allocation rule 5131 (the “amendment”). The amendment allows a fund of funds or other collective investment account that is investing in an IPO to rely on a written representation from an unaffiliated private fund investor that does not look through to its beneficial owners, provided that such unaffiliated private fund is managed by an investment adviser, has assets greater than $50 million, and meets certain other indicia of independence that are described. Originality/value – The paper provides practical guidance from experienced regulatory lawyers regarding an amendment to an important rule governing IPO sales and allocation practices.

What is a Regulation SHO bona-fide market maker?

2017 ◽  
Vol 18 (2) ◽  
pp. 19-26 ◽  
Author(s):  
Larry E. Bergmann ◽  
James P. Dombach
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Market Maker ◽  
Market Making ◽  
Content Type ◽  
The Us ◽  
Bona Fide ◽  
Administrative Proceeding ◽  
Practical Guidance

Purpose To summarize and analyze guidance provided by the US Securities and Exchange Commission (“SEC”) on what constitutes “bona-fide market making” for purposes of Regulation SHO’s exception to the locate requirement. Design/methodology/approach Explains SEC guidance on this subject, focusing on statements by the SEC and its staff related to Regulation SHO and SEC enforcement matters, including a recent SEC administrative proceeding providing concrete examples of activity that does not constitute bona-fide market making. Findings While there is still a lot of room for additional SEC guidance on what constitutes bona-fide market making, the SEC has provided some details on the specific type of trading that would not fall within the Regulation SHO exceptions applying to bona-fide market making activities. However, there is still a large gap between the type of activity that most likely falls within the exception and the concrete examples analyzed by the SEC. Originality/value Practical guidance from experienced securities lawyers that consolidates SEC guidance on the bona-fide market making exception.

SEC publishes important guidance on the Custody Rule, participating affiliate arrangements, robo-advisers, Form PF and certain compliance topics

2017 ◽  
Vol 18 (3) ◽  
pp. 34-40
Author(s):  
Joyce E. Larson ◽  
Kara J. Brown ◽  
Ivet A. Bell
Keyword(s):  
Institutional Investors ◽  
Financial Services ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
The Us ◽  
Practical Guidance ◽  
Investment Advisers ◽  
Regulatory Filing

Purpose To highlight guidance issued by the US Securities and Exchange Commission (SEC) for the benefit of investment advisers regarding certain obligations under the Investment Advisers Act of 1940 (Advisers Act) and the rules thereunder. Design/methodology/approach Summarizes recent guidance regarding issues related to several challenging Advisers Act requirements, including inadvertent custody and client account transfers under Advisers Act Rule 206(4)-2, the use of participating affiliate arrangements pursuant to the “Unibanco” no-action letters, unique considerations affecting automated advisers (i.e., “robo-advisers”), the top five most frequently identified compliance topics identified in examinations conducted by the SEC’s Office of Compliance Inspections and Examinations (OCIE), and recent guidance regarding the private fund regulatory filing Form PF. Findings This guidance may assist advisers in preparing for regulatory examinations and questions from institutional investors. While the recent guidance addresses important topics, the guidance also raises some practical questions. Originality/value Practical guidance from experienced securities and financial services lawyers.

FINRA revises and restructures registration and exam requirements

2018 ◽  
Vol 19 (1) ◽  
pp. 42-49
Author(s):  
Edward J. Johnsen ◽  
John H. Grady
Keyword(s):  
Financial Services ◽  
Regulatory Authority ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Financial Industry ◽  
Content Type ◽  
The Us ◽  
Securities Industry ◽  
Practical Guidance ◽  
Limited Period

Purpose To explain a new set of rules, detailed in FINRA Regulatory Notice 17-30, proposed by the Financial Industry Regulatory Authority (FINRA) and approved by the US Securities and Exchange Commission (SEC), that revise and streamline the number and types of proficiency exams broker-dealer personnel must take in order to become registered, as well as the categories of registration. Design/methodology/approach Discusses the background, including FINRA’s consolidation of National Association of Securities Dealers (NASD) rules; the new registration regime; conditions for waivers; criteria for “permissive” registration; firms’ requirement to designate “Principal Financial Officers” and “Principal Operations Officers”; new categories of principal registration; FINRA’s elimination of certain registration categories; research analyst, research principal and supervisory analyst exam requirements; the ability of a registered representative to function as a principal for a limited period; the prohibition of unregistered persons to accept orders from customers; and the Securities Industry Essentials (SIE) Examination Content Outline. Findings The new structure is intended to bring greater consistency and uniformity to the qualification process. Among other changes, it eliminates several registration categories that either have become outdated or have limited utility, permits persons not yet associated with a broker-dealer or employed in the securities industry to take a preliminary registration exam prior to entering the securities industry, and makes other changes intended to modernize the registration and examination regime for broker-dealer personnel. Originality/value Practical guidance from lawyers with broad stock brokerage, investment management and related financial services experience.

SEC charges “ICO Superstore” as unregistered broker-dealer

2019 ◽  
Vol 20 (1) ◽  
pp. 40-43
Author(s):  
John J. Sikora Jr. ◽  
Stephen P. Wink ◽  
Douglas K. Yatter ◽  
Naim Culhaci
Keyword(s):  
Financial Services ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
The Us ◽  
Recent Developments ◽  
Practical Guidance ◽  
Securities Laws ◽  
Enforcement Activity

Purpose To analyze the settled order of the US Securities and Exchange Commission (SEC) against TokenLot LLC (TokenLot), which was the SEC’s first action charging a seller of digital tokens as an unregistered broker-dealer. Design/methodology/approach Analyzes the SEC’s order within the context of other recent actions by the SEC on cryptocurrencies and digital tokens and discusses future implications of the order in this area. Findings The SEC’s order against TokenLot as an unregistered broker-dealer was a logical next step in its enforcement activity in the cryptocurrency and digital token space.The order demonstrates that the SEC expects firms in the cryptocurrency space to use the well-established constructs of federal securities laws to evaluate their business activities to ensure those activities are legally compliant. Originality/value Practical guidance from experienced securities and financial services lawyers analyzing recent developments in a nascent area of SEC enforcement.

Investment recommendations under the Market Abuse Regulation (MAR) – operative guidelines issued by the Italian Securities and Exchange Commission (CONSOB)

2017 ◽  
Vol 18 (3) ◽  
pp. 85-90
Author(s):  
Lorenzo Parola ◽  
Francesco Falco
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Financial Instruments ◽  
Misleading Information ◽  
Content Type ◽  
The Public ◽  
Market Abuse ◽  
Practical Guidance ◽  
Definition Of ◽  
The Eu

Purpose Analysis of the guidelines on investment recommendations (“Guidelines”) issued by the Italian Securities and Exchange Commission (“CONSOB”) on the application of the EU Regulation No. 596/2014, the Market Abuse Regulation (“MAR”). Design/methodology/approach This article focuses on the Guidelines issued with the aim to facilitate the identification of unlawful conducts of firms and individuals disseminating investment recommendations on financial instruments or issuers. In particular, the definition of investment recommendations as per MAR, the duties of persons providing such information and also the investigative powers conferred to CONSOB in order to prevent the dissemination of false or misleading information to the public are examined in detail. Findings The Guidelines are an important interpretative tool for firms and individuals providing investment recommendations on financial instruments or issuers. They further determine the duties deriving from MAR and the investigative powers attributed to CONSOB. Originality/value This article provides useful information on MAR and practical guidance on the applicability of this regulation to persons and firms providing investment recommendations on financial instruments or issuers.

The SEC brings its first enforcement action under the identity theft red flags rule

2019 ◽  
Vol 20 (1) ◽  
pp. 31-35
Author(s):  
Vincente L. Martinez ◽  
Julia B. Jacobson ◽  
Nancy C. Iheanacho
Keyword(s):  
Design Methodology ◽  
Identity Theft ◽  
Securities And Exchange Commission ◽  
Red Flags ◽  
Content Type ◽  
Enforcement Action ◽  
Policies And Procedures ◽  
The Us ◽  
Practical Guidance ◽  
Investment Advisers

Purpose To explain the significance of the first enforcement action under the Identity Theft Red Flags Rule by the US Securities and Exchange Commission (SEC), which was announced on September 26, 2018. Design/methodology/approach Explains how the SEC’s order not only cites violations of the Safeguards Rule under Regulation S-P (a staple of SEC cybersecurity enforcement actions against broker-dealers and investment advisers) but also is the SEC’s first enforcement action for a violation of the Identity Theft Red Flags Rule under Regulation S-ID, which requires certain SEC registrants to create and implement policies to detect, prevent and mitigate identity theft. Findings Cybersecurity policies and procedures must match business risks and change as business risks change. Originality/value Practical guidance from experienced cybersecurity and privacy lawyers.

SEC touts whistleblower award to a compliance professional – use care in responding to reports of potential violations

2015 ◽  
Vol 16 (1) ◽  
pp. 77-78
Author(s):  
Mark Srere ◽  
Mary Beth Buchanan ◽  
Elaine Koch ◽  
Jennifer Mammen ◽  
Tyson A. Johnson
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
Compliance Programs ◽  
The Us ◽  
Compliance Audit ◽  
Practical Guidance ◽  
Credible Information ◽  
Practical Implications

Purpose – To highlight the first award granted under the US Securities and Exchange Commission Whistleblower Program to a compliance professional. Design/methodology/approach – Explains the first award issued to a compliance professional under the SEC’s Whistleblower program and the rules for issuing such an award. Findings – The SEC has emphasized this award to a compliance professional, noting that individuals performing compliance, audit, and legal functions are on the front lines against fraud and corruption and are often privy to the very kinds of specific, timely, and credible information that can prevent an imminent fraud or stop an ongoing fraud. The SEC’s specific courting of compliance and audit personnel makes it even more important for companies to pay particular attention to complaints raised by those individuals. Practical implications – Companies should continue to take steps to ensure that they have vigorous compliance programs in place to detect potential issues and to respond immediately and effectively to internally reported information. Originality/value – Practical guidance from experienced regulatory and employment lawyers.

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