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The purpose of this paper is to explain changes to the SEC rules governing private offerings of securities, permitting general solicitation and general advertising in certain private placements conducted under Rule 506 of Regulation D under the US Securities Act of 1933, and amending Rule 506 to disqualify certain “bad actors” from private placements conducted under the rule.

The paper explains the new Rule 506(c), which removes the prohibition on general solicitation and general advertising provided that all purchasers are accredited investors and the issuer has taken all reasonable steps to verify that they are accredited investors. The paper explains the final rules relating to bad-actor disqualifications, and also explains several amendments to Regulation D that the SEC has proposed to give the Commission additional insight into the market and help prevent potential fraud.

In adopting these rule amendments simultaneously, the SEC balanced the often counterpoised considerations of promoting capital formation and protecting investors.

Issuers engaging in offerings under the new Rule 506(c) must develop adequate processes to verify the accredited investor status of purchasers and to identify bad actors as defined in the rule.

The paper provides practical guidance from experienced financial services lawyers.

To explain the SEC's new Compliance and Disclosure Interpretations (“CDIs”) relating to the recently adopted amendments to Rule 144A and Rule 506, which permitted general solicitation and general advertising (“general solicitation”) in all Rule 144A offerings and select Regulation D offerings under Rule 506.

The article summarizes amended rules and recently issued CDIs, while also explaining some of their implications.

The new CDIs provide a number of helpful clarifications and confirmations on aspects of the amended rules relating to general solicitation, transitioning between different types of Rule 506 offerings and investor verification under Rule 506(c).

Practical summary of recent SEC guidance with explanation from seasoned corporate securities attorneys.

The purpose of this paper is to discuss state securities legend requirements for private offerings made pursuant to Rule 506 of Regulation D, with a particular focus on hedge fund and private equity fund issuers.

The paper explains relevant federal and state securities registration laws, including the National Securities Market Improvement Act of 1956 (“NSMIA”), which creates a category of “covered securities” that are partially preempted from certain state securities regulations. Explains that offerings under Rule 506 of Regulation D are “covered securities” under NSMIA, but that an issuer that offers its securities may be considered a broker‐dealer under some state broker‐dealer laws; those state broker‐dealer registration laws may require a state securities legend on offering documents in order to meet a state exemption from registering as a broker‐dealer in the state. It also explains state legend requirements under state broker‐dealer laws in general and then provides detail on four states whose legends practitioners often include in private placement memos: Florida, Georgia, New Hampshire, and Pennsylvania.

The paper finds that state securities legends, other than Florida's legend, will never be required for a Rule 506 offering, and the inclusion of unnecessary legends, even as a precaution, can result in confusion or possibly claims that the issuer has violated state securities laws or included misleading information.

The paper provides practical advice from an experienced securities lawyer.

The private placement is the principal alternative method of financing to an SEC registered offering. The private placement avoids registration under the Securities Act of 1933 (the “Securities Act”) with its concomitant costs and delays. It also avoids periodic reporting under the Securities Exchange Act of 1934 (the “Exchange Act”) for foreign private issuers. Issuers frequently resell their private placement securities abroad or to other qualified institutional investors. The combination of statutory exemptions, Rule 144A, Regulation S, and other SEC initiatives enable issuers to take advantage of these benefits

For the sponsor or manager of a non‐US investment fund, the mantle of US laws and regulations surrounding the offering of fund shares to US investors can be mystifying. In an effort to simplify and clarify the legal miasma, the US Congress and Securities and Exchange Commission (SEC) have in the past year taken action to facilitate the offering of interests to more sophisticated investors in both foreign and domestic private investment funds. This paper describes the recent legislation enacted by Congress, rules and interpretations issued by the SEC and its staff to implement and effectuate the legislation and strategies for privately offered investment companies to take advantage of the new, more liberal regulatory scheme.

To discuss general legal considerations for non-US private equity sponsors who seek to market their funds to US institutional investors.

Explains relevant aspects of US securities laws, commodity exchange laws, pension and employee benefit plan laws, federal income tax laws, and the Foreign Account Tax Compliance Act (FATCA).

The evolving US regulatory regime necessitates careful planning and thorough knowledge of relevant laws and regulations to effect a successful US marketing effort.

Practical guidance from experienced investment funds and tax lawyers.

This chapter synthesizes the economics, law, and technology of security tokens and security token offerings (STOs). Security tokens are an increasingly important instrument in decentralized finance (DeFi) markets. They are blockchain-based investment contracts that are subject to securities law. Interoperability, fractional ownership, market liquidity, and rapid settlement are the main reasons security tokens are a primary catalyst for digitizing finance. The chapter empirically compares STOs with initial exchange offerings (IEOs) and initial coin offerings (ICOs). STOs take longer and raise more funding. However, controlling for other factors, the amount raised in STOs and IEOs is lower than in utility-token ICOs. These findings suggest an avenue for future research. Moreover, both the law and the technology of security tokens need to address critical challenges related to the competent jurisdiction in multinational activities and blockchain interoperability, scalability, and natural resource degradation.

This chapter discusses legal considerations relating to digital assets. The legal aspects of tokenized and non-tokenized assets are evolving. Although some states have enacted specific laws or regulations for digital assets, Congress and federal agencies have been slower to craft specific rules and regulations for such assets. As a result, regulators, such as the Securities and Exchange Commission, Commodity Futures Trading Commission, and Internal Revenue Service, and market participants must apply existing guidance to digital assets. This chapter examines applying specific aspects of federal securities and tax law to digital assets. It also discusses general business law considerations for blockchain and cyber enterprises. The discussion of state law applications centers on the New York Virtual Currency License and Wyoming and Delaware crypto initiatives. This chapter does not provide a comprehensive review of all legal issues related to cryptocurrency. Each legal issue about cryptocurrency is complex and requires separate analyses.

To provide an overview of the basic model used by many peer-to-peer lending platforms and some of the key peer lending regulatory and structuring considerations under the federal securities laws.

Explains how the basic peer lending model works, how “borrower dependent notes” or “BDNs” may be offered in private placements or less commonly through public offerings, how companies engaged in peer lending are compensated, how sponsors of peer lending programs generally avoid registration as broker-dealers under the Securities Exchange Act of 1934, as investment advisers under the Investment Advisers Act of 1940 and as investment companies under the Investment Company Act of 1940, and how peer lending platforms are structured to take into account the laws that govern online transactions, consumer privacy, and other related issues.

The authors expect that peer-to-peer lending platforms will continue to mature and evolve, and they expect that the issues discussed in this article will continue to drive their structuring decisions, business models, and regulatory compliance under the federal securities laws.

Practical guidance from experienced financial services lawyers.

If you're a prudent entrepreneur, you'll seek capital using the most efficient, least costly path available. Yet you might find your opportunities blocked. Investment bankers may consider your capital requirement too small for a public offering. Commercial bankers may say they're not in the venture capital business. And asset based lenders may claim your assets aren't valuable enough to support the need.