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An expanded universe of individuals and entities will be able to participate as “accredited investors” in securities offerings as a result of recent SEC rulemaking.

TAKEAWAYS

  • The SEC has expanded its definition of “Accredited Investor” to additional individuals and entities, including individuals with certain professional certifications and knowledgeable employees of private funds.
  • The amendments may provide additional regulatory certainty for issuers, investors and counsel.

On August 26, 2020, the Securities and Exchange Commission (the SEC) adopted amendments to the definition of “accredited investor” in Rule 501(a) of Regulation D under the Securities Act of 1933 (the Amendments). The Amendments, which will become effective 60 days after they are published in the Federal Register, expand the pool of individuals and entities that qualify as accredited investors. The definition of accredited investor is relevant, among other things, to the operation of Rule 506 of Regulation D, which is a safe harbor under Section 4(a)(2) of the Securities Act. Rule 506 is the most commonly-used exemption for private offerings, accounting for the vast majority of the trillions of dollars raised through unregistered offerings every year. Unregistered, private offerings of securities have supplanted public offerings as the dominant form of capital-raising in the United States. Since regulatory requirements are much greater for offerings that include non-accredited investors, an overwhelming majority of Rule 506 offerings are offered only to accredited investors.

READ MORE. . .

Read this article and additional Pillsbury publications at Pillsbury Insights.

More of this will be covered at an ALI CLE webinar, sponsored by Pillsbury, later this month that focuses on Regulation D Offerings and Private Placements.  To find out more about this webinar and to register, please visit https://www.ali-cle.org/course/Regulation-D-Offerings-Private-Placements-2020-VCCP0922

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What happens if your company is a PPP or Main Street borrower and is contemplating a sale of the company while the loan is outstanding? Much has been written about the basis for applying for the loans, but Pillsbury partners Matt Swartz and Joel Simon dig deeper on Episode 6 of Pillsbury’s Industry Insights podcast to look at the practical implications down the road for borrowers who may be sold in a M&A transaction prior to the loan’s maturity or forgiveness. Continue reading →

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On May 22, 2020, the Small Business Administration (SBA) issued its interim final rule on loan forgiveness. The rule describes, in a question-and-answer format, the mechanics of applying for and receiving loan forgiveness under the Paycheck Protection Program. In “SBA Issues Long-Awaited Paycheck Protection Program Forgiveness Regulations,” colleagues Jenny Y. Liu, David B. Dixon and Matthew Oresman discuss how the May 22, 2020 interim final rule is consistent with, and expands on, the loan forgiveness calculation that was evident from SBA’s loan forgiveness application template, which SBA published on May 15, 2020.

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Both the House and Senate have passed a bipartisan bill to modify elements of the PPP established by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The legislation, intended to provide a “quick fix” to obstacles faced by small businesses seeking relief under the forgivable loan program, was signed into law by President Trump on June 5, 2020. In “Key Changes to Paycheck Protection Program,” colleagues Matthew Oresman, Lori Panosyan and Jenny Y. Liu discuss how the Flexibility Act proposes to amend the controversial 75/25 rule imposed by the SBA that currently requires PPP borrowers to use at least 75 percent of their loan proceeds on payroll costs, amid other changes.

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We urge our clients to consult Pillsbury’s comprehensive COVID-19 Resource Center for information regarding Responding to a Global Crisis, Business Interruption, Cybersecurity, Employer Concerns and other general matters related to the COVID-19 pandemic. We also recommend the following specific measures to mitigate risks of business interruption and regulatory noncompliance resulting from the COVID-19 pandemic.

Continue reading →

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Registered and Exempt Reporting Firms:

The deadline for the annual update of Form ADV is approaching.  We have previously notified you regarding filing obligations that were due between January 1 and March 1.  Below is a recommended compliance and filing deadline table addressing registered firms’ obligations for the remainder of the calendar year.  Let us know if you need any assistance.

Annual Compliance Deadlines

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In response to the coronavirus pandemic, see the Pillsbury articles and webinar regarding our recommendations. If you have not already, at this point you should:

  • Review and/or activate your business continuity plan
  • Review your vendor relationships and assess any stressors
  • Shore up cybersecurity protections and be vigilant regarding heightened risks
  • Assemble a response team for immediate, intermediate and long-term plans

Please contact us with any of your needs.

Read this article and additional Pillsbury publications at Pillsbury Insights.

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The California Consumer Privacy Act (CCPA), a broad statute which imposes new data privacy obligations on certain companies that do business in California, will become effective on January 1, 2020. Fund managers and other investment advisers (“Advisers”) and certain of their affiliates that are currently subject to data privacy laws pursuant to the Gramm-Leach-Bliley Act (GLBA) or the UK General Data Protection Regulation (GDPR) may have additional obligations to consider and prepare for as the CCPA compliance deadline approaches.

Continue reading →

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Recommendations for employers before new law goes into effect on January 1, 2020

TAKEAWAYS

  • On September 18, 2019, California Governor Gavin Newsom signed into law a bill making it risky for employers (regardless of size) to classify many types of workers as independent contractors.
  • Contingent-workforce industries, founded in the Silicon Valley, were unsuccessful in their attempt to thwart the legislation, which is the most aggressive in classifying workers as employees in the country.

California Governor Gavin Newsom signed into law Assembly Bill 5—sweeping legislation that requires most “gig economy” workers to be treated as employees, effective January 1, 2020. The law impacts not only tech giants in the gig economy, but also applies to many traditional contract workers such as truckers, software coders, janitors and exotic dancers, among many others. Multiple industries and occupations secured exemptions to the law, but they still must comply with the traditional tests for independent contractor status.

READ MORE . . .

Read this article and additional Pillsbury publications at Pillsbury Insights.

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While acknowledging the challenges in applying the securities laws to digital assets, the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA), in a joint statement on July 8, 2019, reaffirm that those rules equally apply to digital assets, and promise they will continue to engage the industry in finding solutions.

Read the full public statement HERE.