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                    [alias] => jobs-act
                    [title] => JOBS Act
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                            [title] => The Reality of General Solicitation
                            [content] => <p>On April 5, 2012 President Obama signed the Jumpstart Our Business Startups Act (JOBS Act) into law to make securities regulations friendlier to small businesses by reducing barriers to capital.  A key component of that law was the elimination of the ban on General Solicitation, which was approved on September 23, 2013 by the SEC.  This exciting change was the first time since 1933 that companies can raise capital through marketing an offering publicly.  Thousands of investors can discover companies through social media, and advertising in newspapers, billboards and television. As a result, the way private placements are conducted will be forever changed.  Both companies seeking capital and broker dealers applauded the rules.  They rejoiced that General Solicitation has the potential to make a profound impact on the way companies and investors invest.   The reality is that it probably will not.</p><p>Under Rule 506 of Regulation D, commonly known as the private placement rule, investors must be accredited. Accredited status is defined by Rule 501 as an individual who has annual income that exceeded $200,000 in each of the most recent years or a joint annual income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.  Alternatively an investor can qualify by having an individual or joint net worth with a spouse that exceeds $1 million, exclusive of the value of a primary residence.</p><p>In a Rule 506(b) offering, which is not generally solicited, investors can represent their accredited status to an issuer by “checking the box.” Companies seeking capital, known as Issuers are not required to take reasonable steps to verify the investor’s statements.  That has all changed with Rule 506(c), a general solicitation offering.  To permit the use of general solicitation, issuers must take “reasonable steps” to verify the investor is accredited.  These verification steps include reviewing Form W2, 1099 or tax returns.  Issuers can also request and review brokerage account statements or have a third party, such as a brokerage firm, law or accounting firm represent that it has reviewed such documents and has verified the status of the investor as accredited.   </p><p>Unfortunately, this is easier said than done.  The idea behind the JOBS act was to use new media to attract investors.  Issuers, many without the use of a broker dealer, plan to use the web and social media to market their offerings.   Why pay a broker dealer to advise an issuer with regard to an offering when an issuer can reach investors, who in the past would never have heard of the opportunity, directly through social media or advertising on the internet. </p><p>Investors who are contacted through mass advertising or through the internet are not going to be forthcoming in providing confidential, sensitive personal information to complete strangers in this age of identity theft and fraud.  These accredited investors are deemed to be sophisticated and educated to make investment decisions.  These very investors are also educated enough to be weary of fraud and hesitant to provide required information at all.   Without turning over this information to comply with Rule 506 (c), issuers will not be closing deals. </p><p>Service providers have emerged that claim they will be trusted and independent to gather and safeguard this personal information, but are issuers and investors willing to pay the extra fees for this service? Is the hassle of the information request and compliance with the new regulations worth it for the issuer and are investors willing to be bothered to comply?</p><p>Solutions do exist.  Under the regulations, an issuer is deemed to satisfy the verification requirement if the issuer obtains a written confirmation from a registered broker dealer, an SEC registered investment adviser, a licensed attorney or a certified public accountant. Alternatively the issuer can use the services of a broker dealer to conduct the private placement.  Broker dealers are regulated, SIPC insured and follow the guidelines set forth by both the SEC and FINRA.  Investors will be more comfortable providing the information needed to comply with Rule 506(c) knowing that a regulated firm is involved. Issuers can have comfort knowing they are guided by professionals whose business is to raise capital and comply with the regulations.  </p><p>Investors also have other area of concern they should be aware of including was adequate due diligence completed, was comprehensive backgrounds checks completed and will liquidity eventually result from the investment.   These concerns can be addressed by having a licensed broker dealer involved.  
Issuers need to beware too. Following the additional rules set forth in Rule 506(c) is also complex and requires attention to timing and details.  The SEC is considering additional rule changes that could result in dire consequences if the issuer makes an error in the filing requirements or procedures, such as loss of the exemption for up to a year.  Although the JOBS Act allows companies to raise capital directly without the use of a broker dealer, eliminating broker dealers from the process is not in the public’s best interest.</p><p>It’s too early to tell whether general solicitation will work and create the flow of capital to small business that President Obama intended.  What is known is that the world is now open to be marketed to and, when done correctly, both issuers and investors will have access to deals they never would have in the past.</p>
                            [author_id] => 4
                            [position] => 0
                            [is_active] => 1
                            [created_at] => 2014-04-29 00:00:00
                            [updated_at] => 2014-04-28 14:41:20
                            [name] => Mark Elenowitz, CEO of BANQ
                            [description] => Mark Elenowitz is CEO TriPoint Global Equities, a FINRA Member Broker Dealer and its division BANQ; a newly launched, electronic investment-banking platform that will streamline the matching of accredited investors with quality growth companies. BANQ widely markets its offerings utilizing the new general solicitation and advertising rules promulgated by the U.S. Securities & Exchange Commission, in response to the passage of the JOBS Act of 2012. BANQ is based in New York.
                            [photo] => qOvzbS_wpeQUw_Elenowitz  Headshot 4.jpg
                        )

                    [1] => Array
                        (
                            [insight_id] => 5
                            [category_id] => 1
                            [title] => SEC Proposes Far-Reaching Reforms for Smaller Public Offerings
                            [content] => <p><strong>SEC PROPOSES FAR-REACHING REFORMS 
FOR SMALLER PUBLIC OFFERINGS&nbsp;</strong></p><p>Background
Following the mandate of the Jumpstart Our Business Start-Up (JOBS) Act, on December 18, 2013 the Securities and Exchange Commission proposed rules to amend largely forgotten and little-used Regulation A. Having received far less attention than either of the other two major equity raising initiatives under the JOBS Act, general solicitation of accredited investors and equity crowdfunding, the revisions to Regulation A may well be the most far-reaching of the JOBS Act reforms. Informally known as “Regulation A+”, the new proposal – expected to be adopted by the SEC in the first half of 2014 following a 60-day public comment period – has the potential to become a dramatically less expensive path to going public for many smaller companies whose investors seek an exit strategy or liquidity for their investment.&nbsp;</p><p>The SEC’s proposal builds upon existing Regulation A, which is an existing exemption from registration for small offerings of securities up to $5 million within a 12-month period. The two major drawbacks to Regulation A are the small dollar limit (thereby resulting in high transaction costs as a percentage of the offering) and the fact that Regulation A offerings are not exempt from state blue sky laws, adding additional levels of complexity and cost to completing a Regulation A transaction. For these reasons, Regulation A receded into relative obscurity over the last few decades. Regulation A, in its current form, will continue as so-called Tier 1 of Regulation A, and we expect reliance on Tier 1 to continue to remain in obscurity.&nbsp;</p><p>As proposed, “Regulation A+” will enable companies to publicly offer and sell up to $50 million of securities within a 12-month period under a so-called Tier 2 within Regulation A. In addition, and crucially, Tier II-registered securities will be exempt from state blue sky laws, something that the state securities administrators strongly oppose. Finally, ongoing reporting obligations will be less burdensome than those for traditional reporting companies.</p><p><strong>Proposal&nbsp;</strong></p><p>As proposed, both Tier 1 and Tier 2 offerings under Regulation A will:&nbsp;</p><p>•permit companies to submit draft offering statements for non-public SEC review prior to filing;&nbsp;</p><p>•permit the use of “testing the waters” solicitation materials both before and after filing of the offering statement;
•modernize the qualification, communications and offering process in Regulation A to reflect analogous provisions of the Securities Act registration process; and&nbsp;</p><p>
•require electronic filing of offering materials.</p><p>
In addition, in Tier 2 offerings:&nbsp;</p><p>•investors would be limited to purchasing no more than 10 percent of the greater of the investor’s annual income or net worth.&nbsp;</p><p>•the financial statements (two years in most cases) included in the offering circular would be required to be audited; and&nbsp;</p><p>•the company would be required to file annual and semi-annual periodic reports and current event updates that are similar to the current requirements for public company reporting under the Exchange Act.&nbsp;</p><p>The main eligibility requirements to use Regulation A (both Tier 1 or Tier 2) include that the company:&nbsp;</p><p>
•must be organized in the United States or Canada;&nbsp;</p><p>•cannot have no specific business plan or purpose or have indicated that its business plan is to engage in a merger or acquisition with an unidentified company;&nbsp;</p><p>•is not or has not been subject to an SEC order revoking the company’s registration under the Exchange Act during the preceding five years; and
•is not disqualified under the recently adopted “bad actor” disqualification rules.&nbsp;</p><p>
If you have questions regarding the new SEC proposal, other capital raising initiatives under the JOBS Act, strategic planning to take advantage of the new initiatives or specific fact patterns, please contact:
Lance Jon Kimmel
SEC Law Firm
11693 San Vicente Boulevard
Suite 357
Los Angeles, California 90049
tel. 310/557-3059
lkimmel@seclawfirm.com</p>
                            [author_id] => 5
                            [position] => 0
                            [is_active] => 1
                            [created_at] => 2014-01-06 00:00:00
                            [updated_at] => 2014-04-09 20:49:22
                            [name] => Lance Jon Kimmel
                            [description] => Securities Attorney at SEC Law Firm
                            [photo] => EpetRJ_attorney-254x300.jpg
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                            [insight_id] => 4
                            [category_id] => 1
                            [title] => The Reality of General Solicitation
                            [content] => <p>On April 5, 2012 President Obama signed the Jumpstart Our Business Startups Act (JOBS Act) into law to make securities regulations friendlier to small businesses by reducing barriers to capital.  A key component of that law was the elimination of the ban on General Solicitation, which was approved on September 23, 2013 by the SEC.  This exciting change was the first time since 1933 that companies can raise capital through marketing an offering publicly.  Thousands of investors can discover companies through social media, and advertising in newspapers, billboards and television. As a result, the way private placements are conducted will be forever changed.  Both companies seeking capital and broker dealers applauded the rules.  They rejoiced that General Solicitation has the potential to make a profound impact on the way companies and investors invest.   The reality is that it probably will not.</p><p>Under Rule 506 of Regulation D, commonly known as the private placement rule, investors must be accredited. Accredited status is defined by Rule 501 as an individual who has annual income that exceeded $200,000 in each of the most recent years or a joint annual income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.  Alternatively an investor can qualify by having an individual or joint net worth with a spouse that exceeds $1 million, exclusive of the value of a primary residence.</p><p>In a Rule 506(b) offering, which is not generally solicited, investors can represent their accredited status to an issuer by “checking the box.” Companies seeking capital, known as Issuers are not required to take reasonable steps to verify the investor’s statements.  That has all changed with Rule 506(c), a general solicitation offering.  To permit the use of general solicitation, issuers must take “reasonable steps” to verify the investor is accredited.  These verification steps include reviewing Form W2, 1099 or tax returns.  Issuers can also request and review brokerage account statements or have a third party, such as a brokerage firm, law or accounting firm represent that it has reviewed such documents and has verified the status of the investor as accredited.   </p><p>Unfortunately, this is easier said than done.  The idea behind the JOBS act was to use new media to attract investors.  Issuers, many without the use of a broker dealer, plan to use the web and social media to market their offerings.   Why pay a broker dealer to advise an issuer with regard to an offering when an issuer can reach investors, who in the past would never have heard of the opportunity, directly through social media or advertising on the internet. </p><p>Investors who are contacted through mass advertising or through the internet are not going to be forthcoming in providing confidential, sensitive personal information to complete strangers in this age of identity theft and fraud.  These accredited investors are deemed to be sophisticated and educated to make investment decisions.  These very investors are also educated enough to be weary of fraud and hesitant to provide required information at all.   Without turning over this information to comply with Rule 506 (c), issuers will not be closing deals. </p><p>Service providers have emerged that claim they will be trusted and independent to gather and safeguard this personal information, but are issuers and investors willing to pay the extra fees for this service? Is the hassle of the information request and compliance with the new regulations worth it for the issuer and are investors willing to be bothered to comply?</p><p>Solutions do exist.  Under the regulations, an issuer is deemed to satisfy the verification requirement if the issuer obtains a written confirmation from a registered broker dealer, an SEC registered investment adviser, a licensed attorney or a certified public accountant. Alternatively the issuer can use the services of a broker dealer to conduct the private placement.  Broker dealers are regulated, SIPC insured and follow the guidelines set forth by both the SEC and FINRA.  Investors will be more comfortable providing the information needed to comply with Rule 506(c) knowing that a regulated firm is involved. Issuers can have comfort knowing they are guided by professionals whose business is to raise capital and comply with the regulations.  </p><p>Investors also have other area of concern they should be aware of including was adequate due diligence completed, was comprehensive backgrounds checks completed and will liquidity eventually result from the investment.   These concerns can be addressed by having a licensed broker dealer involved.  
Issuers need to beware too. Following the additional rules set forth in Rule 506(c) is also complex and requires attention to timing and details.  The SEC is considering additional rule changes that could result in dire consequences if the issuer makes an error in the filing requirements or procedures, such as loss of the exemption for up to a year.  Although the JOBS Act allows companies to raise capital directly without the use of a broker dealer, eliminating broker dealers from the process is not in the public’s best interest.</p><p>It’s too early to tell whether general solicitation will work and create the flow of capital to small business that President Obama intended.  What is known is that the world is now open to be marketed to and, when done correctly, both issuers and investors will have access to deals they never would have in the past.</p>
                            [author_id] => 4
                            [position] => 0
                            [is_active] => 1
                            [created_at] => 2014-04-29 00:00:00
                            [updated_at] => 2014-04-28 14:41:20
                            [name] => Mark Elenowitz, CEO of BANQ
                            [description] => Mark Elenowitz is CEO TriPoint Global Equities, a FINRA Member Broker Dealer and its division BANQ; a newly launched, electronic investment-banking platform that will streamline the matching of accredited investors with quality growth companies. BANQ widely markets its offerings utilizing the new general solicitation and advertising rules promulgated by the U.S. Securities & Exchange Commission, in response to the passage of the JOBS Act of 2012. BANQ is based in New York.
                            [photo] => qOvzbS_wpeQUw_Elenowitz  Headshot 4.jpg
                        )

                    [1] => Array
                        (
                            [insight_id] => 5
                            [category_id] => 1
                            [title] => SEC Proposes Far-Reaching Reforms for Smaller Public Offerings
                            [content] => <p><strong>SEC PROPOSES FAR-REACHING REFORMS 
FOR SMALLER PUBLIC OFFERINGS&nbsp;</strong></p><p>Background
Following the mandate of the Jumpstart Our Business Start-Up (JOBS) Act, on December 18, 2013 the Securities and Exchange Commission proposed rules to amend largely forgotten and little-used Regulation A. Having received far less attention than either of the other two major equity raising initiatives under the JOBS Act, general solicitation of accredited investors and equity crowdfunding, the revisions to Regulation A may well be the most far-reaching of the JOBS Act reforms. Informally known as “Regulation A+”, the new proposal – expected to be adopted by the SEC in the first half of 2014 following a 60-day public comment period – has the potential to become a dramatically less expensive path to going public for many smaller companies whose investors seek an exit strategy or liquidity for their investment.&nbsp;</p><p>The SEC’s proposal builds upon existing Regulation A, which is an existing exemption from registration for small offerings of securities up to $5 million within a 12-month period. The two major drawbacks to Regulation A are the small dollar limit (thereby resulting in high transaction costs as a percentage of the offering) and the fact that Regulation A offerings are not exempt from state blue sky laws, adding additional levels of complexity and cost to completing a Regulation A transaction. For these reasons, Regulation A receded into relative obscurity over the last few decades. Regulation A, in its current form, will continue as so-called Tier 1 of Regulation A, and we expect reliance on Tier 1 to continue to remain in obscurity.&nbsp;</p><p>As proposed, “Regulation A+” will enable companies to publicly offer and sell up to $50 million of securities within a 12-month period under a so-called Tier 2 within Regulation A. In addition, and crucially, Tier II-registered securities will be exempt from state blue sky laws, something that the state securities administrators strongly oppose. Finally, ongoing reporting obligations will be less burdensome than those for traditional reporting companies.</p><p><strong>Proposal&nbsp;</strong></p><p>As proposed, both Tier 1 and Tier 2 offerings under Regulation A will:&nbsp;</p><p>•permit companies to submit draft offering statements for non-public SEC review prior to filing;&nbsp;</p><p>•permit the use of “testing the waters” solicitation materials both before and after filing of the offering statement;
•modernize the qualification, communications and offering process in Regulation A to reflect analogous provisions of the Securities Act registration process; and&nbsp;</p><p>
•require electronic filing of offering materials.</p><p>
In addition, in Tier 2 offerings:&nbsp;</p><p>•investors would be limited to purchasing no more than 10 percent of the greater of the investor’s annual income or net worth.&nbsp;</p><p>•the financial statements (two years in most cases) included in the offering circular would be required to be audited; and&nbsp;</p><p>•the company would be required to file annual and semi-annual periodic reports and current event updates that are similar to the current requirements for public company reporting under the Exchange Act.&nbsp;</p><p>The main eligibility requirements to use Regulation A (both Tier 1 or Tier 2) include that the company:&nbsp;</p><p>
•must be organized in the United States or Canada;&nbsp;</p><p>•cannot have no specific business plan or purpose or have indicated that its business plan is to engage in a merger or acquisition with an unidentified company;&nbsp;</p><p>•is not or has not been subject to an SEC order revoking the company’s registration under the Exchange Act during the preceding five years; and
•is not disqualified under the recently adopted “bad actor” disqualification rules.&nbsp;</p><p>
If you have questions regarding the new SEC proposal, other capital raising initiatives under the JOBS Act, strategic planning to take advantage of the new initiatives or specific fact patterns, please contact:
Lance Jon Kimmel
SEC Law Firm
11693 San Vicente Boulevard
Suite 357
Los Angeles, California 90049
tel. 310/557-3059
lkimmel@seclawfirm.com</p>
                            [author_id] => 5
                            [position] => 0
                            [is_active] => 1
                            [created_at] => 2014-01-06 00:00:00
                            [updated_at] => 2014-04-09 20:49:22
                            [name] => Lance Jon Kimmel
                            [description] => Securities Attorney at SEC Law Firm
                            [photo] => EpetRJ_attorney-254x300.jpg
                        )

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