Monthly Archives: February 2014
SEC Proposes Rules for Regulation A+
On December 18, 2013, the SEC published proposed rules to implement Title IV of the JOBS Act, commonly referred to as Regulation A+. The proposed rules both add the new Section 3(b)(2) (i.e., Regulation A+) provisions and modify the existing Regulation A. This blog is limited to a discussion of the new Regulation A+.
Background
Title IV of the JOBS Act technically amends Section 3(b) of the Securities Act, which up to now has been a general provision allowing the SEC to fashion exemptions from registration, up to a total offering amount of $5,000,000. Regulation A is and has historically been an exemption created under the powers afforded the SEC by Section 3(b).
Technically speaking, Regulation D, Rule 504 and 505 offerings and Regulation A offerings are promulgated under Section 3(b), and Rule 506 is promulgated under Section 4(a)(2). This is important because federal law does not pre-empt state law for Section 3(b) offerings, but it does so for Section 4(a)(2) offerings. The cost of compliance with the various and varied state laws can be prohibitive, especially with an offering limit of $5,000,000. Moreover, although Regulation A is technically an exemption from registration, it actually requires the filing of a registration statement with the SEC (Form 1-A), and such registration statement must clear comments. Accordingly, over the years, Rule 506 has become the private offering exemption of choice, and Rule 505 and Regulation A have rarely been used.
However, Regulation A securities are not restricted securities, and the new proposed Regulation A+ will pre-empt state law and otherwise provides benefits that make this a very attractive option for Issuers.
The New Regulation A+ -The JOBS Act Provisions
Section 401 of the JOBS Act amended Section 3(b) of the Securities Act to renumber the current Regulation A as Section 3(b)(1) and add new Section 3(b)(2), which requires the SEC to adopt a new exemption that includes the following terms and conditions:
(A) The aggregate offering amount of all securities offered and sold within the prior 12-month period in reliance on the exemption shall not exceed $50,000,000.
(B) The securities may be offered and sold publicly.
(C) The securities shall not be restricted.
(D) The civil liability provisions in Section 12(a)(2) shall apply to any person offering or selling the securities.
(E) The Issuer may solicit interest in the offering prior to filing any offering statement in accordance with rules to be written by the SEC.
(F) The SEC shall require the Issuer to file annual financial statements with the SEC.
(G) A suggestion that the SEC require the Issuer to prepare and file an offering document and prospectus with the SEC, and that the SEC enact disqualifying bad boy provisions (Regulation A already has such provisions).
(H) The new exemption provided under Section 401 is limited to equity, debt and convertible debt securities, including any guarantees of such securities.
(I) The JOBS Act allows the SEC to make Regulation A+ Issuers file periodic reports analogous to current 10-Q and 10-K reports by Issuers subject to the reporting requirements of the Exchange Act. (Currently, Regulation A Issuers are not required to file periodic reports with the SEC.)
(J) Securities sold under Section 401(b) of the Jobs Act are “covered securities” for purposes of exempting those securities from state securities registration and offering requirements. That is, the new Regulation A+ pre-empts state law.
The SEC Proposed Rules
In drafting the proposed rules, the SEC reworked the entire Regulation A by bifurcating Regulation A into two tiers: Tier 1 for offerings up to $5 million in any 12-month period including up to $1.5 million for the account of selling security holders (the pre-existing Regulation A); and Tier 2 for offerings up to $50 million in any 12-month period including up to and up to $15 million for the account of selling security holders. The proposed rules both add the new Section 3(b)(2) (i.e., Regulation A+) provisions and modify the existing Regulation A.
The following is a summary of the proposed rules as set forth in the SEC rule release.
Eligible Issuers
As proposed, Regulation A+, like the existing Regulation A, would be available for any company organized in and with their principal place of business in U.S. or Canada. Regulation A+ is unavailable to any entity that is subject to the reporting requirements of the Securities Exchange Act of 1934 (“Exchange Act”) before the offering, investment companies, blank check companies, entities disqualified under bad actor provisions, Issuers of fractional undivided interests in oil or gas rights, or similar interests in mineral rights. Also disqualified are Regulation A+ Issuers who are delinquent with their ongoing Regulation A+ reporting requirements for over two years.
Notably, the SEC release confirms that shell companies (other than blank check shell companies) are not excluded from Regulation A+ offerings. However, the SEC does seek comment on this point and could make a change in the final rule release.
Eligible Securities
The proposed rules limits securities that may be issued under Regulation A+ to equity securities, including common and preferred stock and options, warrants and other rights convertible into equity securities, debt securities and debt securities convertible or exchangeable into equity securities, including guarantees. However, the proposed rules exclude asset-backed securities.
Offering Limitations and Secondary Sales
As noted above, the proposed rules divide Regulation A into two tiers: Tier 1 for offerings up to $5 million in any 12-month period including up to 30% of the offering (i.e., up to $1.5 million) for the account of selling security holders (the pre-existing Regulation A); and Tier 2 for offerings up to $50 million in any 12-month period including up to 30% of the offering (i.e., up to $15 million) for the account of selling security holders.
Sales for the account of security holders (secondary sales) will not be limited to affiliates or non-affiliates, but rather only limited to 30% of the overall offering.
Investment Limitation
The proposed rules would limit the investment amount for an individual investor in a Regulation A+ offering to no more than the greater of 10% of annual income or net worth. Calculation of income and net worth is as provided for accredited investors under Rule 501 of Regulation D. Issuers will be required to notify the investor of the investment limitation. However, Issuers will be able to rely on the investor’s representation of compliance, unless the Issuer knows such representation is untrue.
Integration
The proposed rules maintain current Regulation A integration standards. In particular, a Regulation A offering will not be integrated with any of the following: (i) prior offers or sales of securities; (ii) subsequent offers and sales of securities that are (a) registered under the Securities Act (subject to limitations where there has been solicitations of interest under the “test the waters” provisions; (b) made in reliance on Rule 701 (employee offerings) of the Securities Act; (c) made pursuant to an employee benefit plan; (d) Regulation S offerings (e) offerings made more than 6 months after completion of the Regulation A+ offering; or (f) crowdfunding offerings made under Regulation Crowdfunding.
Treatment under Section 12(g)
Exchange Act Section 12(g) requires that an Issuer with total assets exceeding $10,000,000 and a class of equity securities held of record by either 2,000 persons or 500 persons who are not accredited register with the SEC, generally on Form 10, and thereafter be subject to the reporting requirements of the Exchange Act. The proposed Regulation A+ rules specifically do not provide for any exclusions to the Section 12(g) requirements for Regulation A investors.
Liability under Section 12(a)(2)
Sellers of Regulation A+ securities have liability under Section 12(a)(2) to investors for any offer or sale by means of an offering circular or an oral communication that includes a material misleading statement or material misstatement of fact.
Offering Statement – Electronic Delivery
A company intending to conduct a Regulation A+ offering must file an offering statement with and have it qualified by the SEC. The offering statement will be filed with the SEC using the EDGAR database filing system. Investors must be provided with the final qualified offering statement prior to a sale of securities. Like current registration statements, the proposed Regulation A+ rules provide for an “access equals delivery” model, whereby access to the offering statement via the internet and EDGAR database will satisfy the delivery requirements.
Offering Statement – Non-Public (Confidential) Submission
As is allowed for Emerging Growth Companies, the proposed rules would permit an Issuer to submit an offering statement to the SEC on a confidential basis. Confidential submissions will allow a Regulation A+ Issuer to get the process under way while soliciting interest of investors using the “test the waters” provisions without negative publicity risk if it alters or withdraws the offering before qualification by the SEC. The confidential filing, SEC comments, and all amendments must be publicly filed as exhibits to the offering statement at least 21 calendar days before qualification.
Offering Statement – Form and Content
The proposed rules require use of new modified Form 1-A. Form 1-A consists of three parts: Part I – Notification, Part II – Offering Circular and Part III – Exhibits. Part I calls for certain basic information about the Issuer, and the offering and is primarily designed to confirm and determine eligibility for the use of the Form and a Regulation A offering in general. Part I will include Issuer information; Issuer eligibility, application of the bad actor disqualification and disclosure; jurisdictions in which securities are to be offered and unregistered securities issued or sold within one year.
Part II is the offering circular and is similar to the prospectus in a registration statement and in fact, an Issuer can choose to use Part I of Form S-1 as the offering circular in a Form 1-A offering statement. Part II requires disclosure of basic information about the Issuer and the offering, material risks; dilution, plan of distribution, use of proceeds; description of the business operations; description of physical properties; discussion of financial condition and results of operations (MD&A); identification of and disclosure about directors, executives and key employees; executive compensation; beneficial security ownership information; related party transactions; description of offered securities; and two years of financial information.
The required information in Part II of Form 1-A is scaled down from the requirements in Regulation S-K applicable to Form S-1. Moreover, Issuers that had previously completed a Regulation A offering and had thereafter been subject to and filed reports with the SEC could incorporate by reference from these reports in future Regulation A offering circulars.
Form 1-A requires two years of financial information. All financial statements for Regulation A offerings must be prepared in accordance with GAAP. Financial statements of a Tier 1 Issuer are not required to be audited unless the Issuer has obtained an audit for other purposes. Audited financial statements are required for Tier 2 Issuers. For Tier 1, the accountants must meet independence standards but are not required to be registered with the Public Company Accounting Oversight Board. Audit firms for Tier 2 Issuers must be independent and PCAOB-registered.
Part III requires an exhibits index and a description of exhibits required to be filed as part of the offering statement.
Continuous or Delayed Offerings and Offering Circular Supplements
The proposed rules allow for continuous or delayed offerings (i.e., shelf offerings) using Regulation A+ (Tier 2 offerings). The proposed rule would provide for continuous or delayed offering for the following type of offerings: (i) securities offered or sold by or on behalf of a person other than the Issuer or its subsidiary (resale offerings); (ii) securities offered and sold pursuant to a dividend or interest reinvestment plan or an employee benefit plan; (iii) securities issued upon the exercise of outstanding options, warrants, or rights; (iv) securities issued upon conversion of other securities; (v) securities pledged as collateral or (vi) securities which are offered beginning within two calendar days of the registration qualification date and which will be offered on a continuous basis and which will be offered for in excess of 30 days.
Amendments to the offering circular would be necessary for fundamental changes to the facts presented in the offering circular and to update the financial statements at least annually. Issuers will be required to remain current in their reporting with the SEC to maintain the qualification of the offering circular.
Currently S-1 is unavailable to an Issuer conducting a direct primary offering on a continuous or delayed basis. The ability to do so in a Regulation A+ offering is an attractive option.
Offering Price
All Regulation A offerings must be at a fixed price. That is, no offerings may be made “at the market” or for other than a fixed price.
Qualification
As with an S-1, the SEC would review the offering statement for accuracy and completeness of disclosure, not the merits of the company or the offered securities. Similar to any registration process, the SEC will issue comments and, upon clearing comments, the offering circular will be declared “qualified.” However, unlike other registration processes, a Regulation A or A+ offering circular will only be qualified by order of the commission, and not by the passing of any particular time period.
Solicitation of Interest (“Testing the Waters”)
Regulation A allows for pre-qualification solicitations of interest in an offering commonly referred to as “testing the waters.” All solicitation material must be submitted to the SEC as an Exhibit under Part III of Form 1-A. Issuers can use “test the waters” solicitation materials both before and after the initial filing of the offering statement. In the event that materials are issued after the filing of an offering circular, the materials must include a current preliminary circular or information on where one can be obtained. “Test the waters” solicitations may be made both orally and in writing.
Unlike the “testing of the waters” by emerging growth companies that are limited to QIBs and accredited investors, a Regulation A+ company could reach out to retail and non-accredited investors. After the public filing but before SEC qualification, a company may use its preliminary offering circular to make written offers.
Of course, all “test the waters” materials are subject to the antifraud provisions of federal securities laws.
Ongoing Reporting
Unlike current Regulation A, which does not require ongoing reporting with the SEC other than to report sales or termination of the offering, the proposed rules contemplate two levels of reporting for the two levels of offering (Tier 1 and Tier 2). A Tier 1 company will need to file certain information about the Regulation A offering, including information on sales and the termination of sales, on new Form 1-Z no later than 30 calendar days after termination or completion of the offering. Tier 1 issuers will not have any ongoing reporting requirements.
Tier 2 companies are also required to file certain offering termination information and would have the choice of using Form 1-Z or including the information in their first annual report on new Form 1-K. In addition to the offering summary information, Tier 2 Issuers would be required to submit ongoing reports including: an annual report on Form 1-K, semiannual reports on Form 1-SA, current event reports on Form 1-U and notice of suspension of ongoing reporting obligations on Form 1-Z (all filed electronically on EDGAR).
The ongoing reporting for Tier 2 companies is less demanding than the reporting requirements under the Securities Exchange Act of 1934. In particular, there are fewer 1-K items and only semi-annual 1-SA (rather than the quarterly 10-Q) and fewer events triggering Form 1-U (compared to Form 8-K). The SEC anticipates that companies would use their Regulation A offering circular as the groundwork for the ongoing reports, and they may incorporate by reference text from previous filings.
The proposed rules also provide for a suspension of reporting obligations for a Regulation A Issuer that desires to suspend or terminate its reporting requirements. Termination is accomplished by filing a Form 1-Z and requires that a company be current over stated periods in its reporting, have fewer than 300 shareholders of record, and have no ongoing offers or sales in reliance on a Regulation A+ offering statement. Of course, a company may file a Form 10 to become subject to the full Exchange Act reporting requirements.
In addition to the reduced reporting noted above, a Tier 2 Issuer would not be subject to other Exchange Act compliance, including among others: SEC proxy statement rules; Section 16 reporting by directors, officers and 10% stockholders of ownership and transactions in Issuer securities; Section 13 disclosure by 5% stockholders; Regulation FD compliance to prevent selective disclosure of material information; internal financial and disclosure effectiveness controls under the Sarbanes-Oxley Act; and CEO/CFO certifications required by Sarbanes-Oxley for periodic reports.
Exchange Act Rule 15c2-11 and Rule 144
The ongoing reporting obligations of a Tier 2 Issuer will be deemed to satisfy a broker-dealer’s obligation to review specific information about an Issuer before publishing a quotation. The ongoing reporting obligations of a Tier 2 Issuer will also satisfy the current information requirements under Rule 144.
Freely tradable securities
Securities sold in a Regulation A+ offering, like those under current Regulation A, are not subject to transfer restrictions and are not restricted under Rule 144. Accordingly, it is contemplated that Regulation A Issuers could have a market maker file a 15c2-11 application on their behalf and establish a secondary trading market in their securities.
Relationship with State Securities Law
Under the proposed rules, Tier 2 offerings would pre-empt state law entirely. In addition, under the proposed rules, an Issuer would be able to “test the waters” for Tier 1 (up to $5 million), but would require federal and state review and qualification if, after determining investor interest, the Issuer files an offering statement.
The Author
Laura Anthony, Esq.
Founding Partner
Legal & Compliance, LLC
Corporate, Securities and Going Public Attorneys
LAnthony@LegalAndCompliance.com
Securities attorney Laura Anthony and her experienced legal team provides ongoing corporate counsel to small and mid-size private companies, OTC and exchange traded issuers as well as private companies going public on the NASDAQ, NYSE MKT or over-the-counter market, such as the OTCQB and OTCQX. For nearly two decades Legal & Compliance, LLC has served clients providing fast, personalized, cutting-edge legal service. The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions as well as registration statements on Forms S-1, S-8 and S-4; compliance with the reporting requirements of the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; Regulation A/A+ offerings; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers, ; applications to and compliance with the corporate governance requirements of securities exchanges including NASDAQ and NYSE MKT; crowdfunding; corporate; and general contract and business transactions. Moreover, Ms. Anthony and her firm represents both target and acquiring companies in reverse mergers and forward mergers, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. Ms. Anthony’s legal team prepares the necessary documentation and assists in completing the requirements of federal and state securities laws and SROs such as FINRA and DTC for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the OTC Market’s top source for industry news, and the producer and host of LawCast.com, the securities law network. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Las Vegas, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.
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Legal & Compliance, LLC makes this general information available for educational purposes only. The information is general in nature and does not constitute legal advice. Furthermore, the use of this information, and the sending or receipt of this information, does not create or constitute an attorney-client relationship between us. Therefore, your communication with us via this information in any form will not be considered as privileged or confidential.
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The SEC Establishes Key Exemption to the Broker-Dealer Registration Requirements for M&A Brokers
On January 31, 2014, the SEC Division of Trading and Markets issued a no-action letter in favor of entities effecting securities transactions in connection with the sale of equity control of private operating businesses (“M&A Broker”). The SEC stated that it would not require broker-dealer registration for M&A Brokers arranging for the sale of private businesses, in accordance with the facts and circumstances set forth in the no action letter, as described below.
For many years the SEC has maintained a staunch view that any and all activities that could fall within the broker-dealer registration requirements set forth in Section 15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), require registration. See also the SEC Guide to Broker-Dealer Registration (2008) on the SEC website.
In accordance with the SEC Guide to Broker-Dealer Registration, providing any of the following services may require the individual or entity to be registered as a broker-dealer:
- “finders,” “business brokers,” and other individuals or entities that engage in the following activities:
- Finding investors or customers for, making referrals to, or splitting commissions with registered broker-dealers, investment companies (or mutual funds, including hedge funds) or other securities intermediaries;
- Finding investment banking clients for registered broker-dealers;
- Finding investors for “Issuers” (entities issuing securities), even in a “consultant” capacity;
- Engaging in, or finding investors for, venture capital or “angel” financings, including private placements;
- Finding buyers and sellers of businesses (i.e., activities relating to mergers and acquisitions where securities are involved);
- investment advisers and financial consultants;
- persons that market real estate investment interests, such as tenancy-in-common interests, that are securities;
- persons that act as “placement agents” for private placements of securities;
- persons that effect securities transactions for the account of others for a fee, even when those other people are friends or family members;
- persons that provide support services to registered broker-dealers; and
- persons that act as “independent contractors” but are not “associated persons” of a broker-dealer
Beginning with the enactment of the JOBS Act in April 2012, there has been a substantial shift in the broker-dealer registration regulatory framework.
JOBS Act Exemptions to Broker-Dealer Registration Requirements
The JOBS Act created two exemptions to broker-dealer registration: the first under Title II for platforms that facilitate Rule 506 offerings, and the second under Title III for funding platforms that facilitate crowdfunding offerings.
A. Exemption under Title II of the JOBS Act – Websites and Platforms for 506 Offerings
Title II of the JOBS Act creates a limited exemption to the broker-dealer registration requirements for certain intermediaries that facilitate Rule 506 offerings. In particular, the JOBS Act states that with respect to securities offered and sold in compliance with Rule 506 of Regulation D under the Securities Act, broker or dealer registration will not be required solely because:
(A) a person that maintains a platform or mechanism that permits the offer, sale, purchase, or negotiation of or with respect to securities, or permits general solicitations, general advertisements, or similar or related activities by Issuers of such securities, whether online, in person, or through any other means;
(B) that person or any person associated with that person co-invests in such securities; or
(C) that person or any person associated with that person provides ancillary services with respect to such securities.
Ancillary services are defined as (A) the provision of due diligence services in connection with the offer, sale, purchase, or negotiation of such security, so long as such services do not include, for separate compensation, investment advice or recommendations to Issuers or investors; and (B) the provision of standardized documents to the Issuers and investors, so long as such person or entity does not negotiate the terms of the issuance for and on behalf of third parties and Issuers are not required to use the standardized documents as a condition of using the service.
Finally, the exemption from registration as a broker or dealer also requires that such person and each person associated with such person (A) receives no compensation in connection with the purchase or sale of the security; (B) does not have possession of customer funds or securities in connection with the purchase or sale; and (C) is not subject to statutory disqualification pursuant to Section 3(a)(39) of the Exchange Act (i.e., bad boy provisions).
On February 5, 2013, the SEC issued guidance, via frequently asked questions (FAQs), regarding the exemption from broker-dealer registration under Title II of the JOBS Act. Interestingly, the SEC clarifies that the exemption from broker-dealer registration does not require the drafting or enactment of any rules and accordingly was effective upon signing of the JOBS Act in April 2012 and is fully operational.
The SEC also confirmed that the broker-dealer exemption does not pre-empt state law and accordingly, persons acting in reliance on the new exemption must also comply with any and all applicable state securities regulations.
Although the new statutory language appears self-evident, the SEC confirmed that the exemption applies to websites and social media sites as exempt platforms.
Although the SEC states that it interprets “compensation” very broadly to include any direct or indirect economic benefit, it notes that Congress specifically allowed for co-investing and accordingly, profits from such co-investments would not be considered compensation to disqualify this broker-dealer registration exemption.
In addition, not only is it permissible for a venture capital fund or its adviser to operate a website where it lists offerings of securities by potential portfolio companies, co-invests in those securities with other investors, and provides standardized documents, but the SEC believes that this very scenario shall dominate the use of the exemption. The SEC states, “[A]s a practical matter, we believe that the prohibition on compensation makes it unlikely that a person outside the venture capital area would be able to rely on the exemption from broker-dealer registration.”
Reliance on this new broker-dealer registration exemption is not limited to use by any type of person, as long as they follow the rules, including not receiving compensation in association with the sale of securities. Persons associated with Issuers, including officers, directors and employees, can rely on the exemption and create websites advertising Rule 506 offerings.
On a technical note, the SEC confirms that the exemption is not an exclusion from the definition of broker-dealer. Platforms and intermediaries operating under the new Section 4(b) may be (and most likely are) broker-dealers; they are just exempted from registering as such.
B. Exemption under Title III of the JOBS Act – Crowdfunding Platforms
The JOBS Act and Regulation Crowdfunding create an exemption to broker-dealer registration for “funding portals” that can act as crowdfunding intermediaries. Funding portals will be required to be registered with the SEC and to follow all such registration and ongoing rule and reporting requirements and will be required to be members of FINRA.
The JOBS Act defines a funding portal as “any person acting as an intermediary in a transaction involving the offer or sale of securities for the account of others, solely pursuant to Section 4(6) of the Securities Act of 1933” (i.e., the new crowdfunding section)—provided, however, that a funding portal intermediary may not:
(i) offers investment advice or recommendations;
(ii) solicit purchases, sales, or offers to buy the securities offered or displayed on its website or portal;
(iii) compensate employees, agents or other persons for such solicitation or based on the sale of securities displayed or referenced on its website or portal; or
(iv) hold, manage, possess, or otherwise handle investor funds or securities (hopefully the SEC rules will provide guidance on who can provide these functions and the mechanics of those functions).
An in-depth discussion of the proposed rules and regulations affecting funding portals is beyond the scope of this blog.
SEC No-Action Letter – M&A Brokers
On January 31, 2014, the SEC Division of Trading and Markets issued a no-action letter in favor of entities effecting securities transactions in connection with the sale of equity control of private operating businesses (“M&A Broker”). The SEC stated that it would not require broker-dealer registration for M&A Brokers arranging for the sale of privately held businesses, in accordance with the facts and circumstances set forth in the no-action letter. The no-action letter does not cover the facilitation of sales, mergers or acquisitions of publicly held operating or shell companies, which activities still require broker-dealer registration.
The SEC defined “M&A Broker” as “a person engaged in the business of effecting securities transactions solely in connection with the transfer of ownership and control of a privately-held company through the purchase, sale, exchange, issuance, repurchase, or redemption of, or a business combination involving, securities or assets of the company, to a buyer that will actively operate the company or the business conducted with the assets of the company.” The buyer would not have to be involved in daily operations but could “actively operate the company through the per to elect executive officers and approve the annual budget or by service as an executive…”
The SEC defined “privately held company” as “a company that does not have any class of securities registered, or required to be registered with the Commission under Section 12 of the Exchange Act, or with respect to which the company files, or is required to file, periodic information, documents, or reports under Section 15(d) of the Exchange Act.” The SEC specifically states that the no-action letter does not cover “shell” companies.
The SEC no-action letter provides an exemption for M&A brokers that facilitate mergers, acquisitions, business sales, and business combinations between sellers and buyers of privately held companies. M&A Brokers may advertise the sale of businesses including descriptions of the business, location and price range.
However, the SEC set forth certain limitations and restrictions on the M&A broker exemption. In particular:
(i) M&A Brokers cannot bind parties to a transaction;
(ii) M&A Brokers cannot directly or indirectly provide financing for M&A transactions;
(iii) M&A Brokers cannot have custody, control or possession of or otherwise handle funds or securities issued or exchanged in connection with an M&A transaction;
(iv) No M&A transaction can involve a public offering. Any offering or sale of securities must be conducted in compliance with an applicable exemption from registration. No party to any M&A transaction may be a shell company.
(v) To the extent M&A Brokers represent both buyers and sellers, they must provide clear written representations as to whom they are representing and must obtain written consent from both parties for joint representation.
(vi) If the M&A transaction involves a buyer group, the M&A Broker may not be involved in forming the group;
(vii) The buyer or group of buyers will control and actively operate the company or business. The buyer will be considered to have control if it has the power, directly or indirectly, to direct management or policies of the company, whether through ownership of securities, by contract or otherwise. The necessary control will be presumed if, upon completion of the transaction, the buyer or group of buyers has the right to vote 25% or more of the securities, has the power to sell or direct the sale of 25% or more of the securities, or in the case of a limited partnership or LLC, has the right to receive upon dissolution or has contributed 25% of more of the capital.
(viii) No M&A transaction can result in the transfer of interests to a passive buyer or group of buyers;
(ix) Any securities received by the buyer or M&A Broker in the transaction will be restricted within the meaning of Rule 144;
(x) The M&A Broker, and if an entity, each officer director or employee of the M&A Broker: (a) has not been barred from association with a broker-dealer by the SEC or any state or any self-regulatory organization; (b) is not suspended from association with a broker-dealer.
Finally, the SEC specifically limits the scope of the no-action letter to the federal broker-dealer registration requirements. M&A Brokers will still need to comply with state law requirements and both federal and state anti-fraud laws.
The Author
Laura Anthony, Esq.
Founding Partner
Legal & Compliance, LLC
Corporate, Securities and Going Public Attorneys
LAnthony@LegalAndCompliance.com
Securities attorney Laura Anthony and her experienced legal team provides ongoing corporate counsel to small and mid-size private companies, OTC and exchange traded issuers as well as private companies going public on the NASDAQ, NYSE MKT or over-the-counter market, such as the OTCQB and OTCQX. For nearly two decades Legal & Compliance, LLC has served clients providing fast, personalized, cutting-edge legal service. The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions as well as registration statements on Forms S-1, S-8 and S-4; compliance with the reporting requirements of the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; Regulation A/A+ offerings; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers, ; applications to and compliance with the corporate governance requirements of securities exchanges including NASDAQ and NYSE MKT; crowdfunding; corporate; and general contract and business transactions. Moreover, Ms. Anthony and her firm represents both target and acquiring companies in reverse mergers and forward mergers, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. Ms. Anthony’s legal team prepares the necessary documentation and assists in completing the requirements of federal and state securities laws and SROs such as FINRA and DTC for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the OTC Market’s top source for industry news, and the producer and host of LawCast.com, the securities law network. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Las Vegas, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.
Contact Legal & Compliance LLC. Technical inquiries are always encouraged.
Follow me on Facebook, LinkedIn, YouTube, Google+, Pinterest and Twitter.
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Legal & Compliance, LLC makes this general information available for educational purposes only. The information is general in nature and does not constitute legal advice. Furthermore, the use of this information, and the sending or receipt of this information, does not create or constitute an attorney-client relationship between us. Therefore, your communication with us via this information in any form will not be considered as privileged or confidential.
This information is not intended to be advertising, and Legal & Compliance, LLC does not desire to represent anyone desiring representation based upon viewing this information in a jurisdiction where this information fails to comply with all laws and ethical rules of that jurisdiction. This information may only be reproduced in its entirety (without modification) for the individual reader’s personal and/or educational use and must include this notice.
© Legal & Compliance, LLC 2016
A Basic Overview of Rule 144
The Securities Act of 1933 (“Securities Act”) Rule 144 sets forth certain requirements for the use of Section 4(1) for the resale of securities. Section 4(1) of the Securities Act provides an exemption for a transaction “by a person other than an issuer, underwriter, or dealer.” The terms “Issuer” and “dealer” have pretty straightforward meanings under the Securities Act, but the term “underwriter” does not. Rule 144 provides a safe harbor from the definition of “underwriter.” If all the requirements for Rule 144 are met, the seller will not be deemed an underwriter and the purchaser will receive unrestricted securities.
Although not set out in the statute, all transfer agents and Issuers, along with most clearing and brokerage firms, require an opinion of counsel as to the application of Rule 144 prior to removing the legend from securities and allowing their sale under Rule 144. The opinion letter must set forth that the facts regarding that Issuer, particular stock and selling shareholder comply with the requirements under Rule 144.
Rule 144 only addresses the resale of restricted or control securities, not unrestricted securities or sales directly by an Issuer. Unrestricted securities (such as securities that have been registered under the Securities Act) may be sold without reference or regard to the Rule. Control securities are those securities held by an affiliate of the issuing company, and restricted securities are securities acquired in unregistered, private sales from the issuing company or from an affiliate of the Issuer.
Rule 144 provides certain conditions that must be met for sales by both affiliates and non-affiliates which conditions vary depending on whether the Issuer of the securities is a reporting or non-reporting Issuer. The following chart summarizes the Rule 144 requirements:
| Affiliate or Person Selling on Behalf of an Affiliate | Non-Affiliate (and has not been an affiliate during the prior three months) | |
| Restricted Securities of Reporting Issuers |
During six-month holding period – no resales under Rule 144 Permitted After six-month holding period– may resell in accordance with all Rule 144 requirements, including: • Current public information |
During six-month holding period – no resales under Rule 144 permitted After six-month holding period but before one year – unlimited public resales under Rule 144, except that the current public information requirement still applies After one-year holding period – unlimited public resales under Rule 144; need not comply with any other Rule 144 requirements |
| Restricted Securities of Non-Reporting Issuers | During one-year holding period – no resales under Rule 144 permittedAfter one-year holding period–may resell in accordance with all Rule 144 requirements, including: • Current public information • Volume limitations • Manner of sale requirements • Filing of Form 144 |
During one-year holding period – no resales under Rule 144 permittedAfter one-year holding period – unlimited public resales under Rule 144; need not comply with any other Rule 144 requirements |
The six-month holding period only applies to Issuers that are subject to the reporting requirements of the Securities Exchange Act of 1934 (“Exchange Act”). A voluntary filer is not subject to the Exchange Act reporting requirements, and the longer one-year holding period is applicable. However, the determination of whether the Issuer is reporting or non-reporting is made as of the time of the proposed sale, as is the determination of the other Rule 144 requirements. Accordingly, if, following the issuance of securities, a non-reporting issuer files a Form 10 registration statement and becomes subject to the reporting requirements of the Exchange Act, the six-month holding period would apply.
The current public information requirement is measured at the time of each sale of securities. That is, the Issuer, whether reporting or non-reporting, must satisfy the current public information requirements as set forth in Rule 144(c) at the time that each resale of securities is made in reliance on Rule 144. Many Form 144’s and attorney opinion letters cover a three-month period and a majority of Sellers’ market securities over that three-month period. However, the Seller (or person selling on behalf of the Seller, such as the broker-dealer) is required to make a determination that the current public information is available at the time of each sale.
The holding period is determined as of the date of the proposed sale—provided, however, that Rule 144 makes numerous specific provisions for the calculation of the holding period and enumerates specific instances in which a holding period may be tacked onto the holding period of previously issued securities. For example, in determining the holding period where the securities were paid with a promissory note, installment contract or other obligation to pay in the future, the holding period does not begin until payment has been made in full—that is, unless the promissory note or installment contract provides for full recourse against the purchaser of the securities, is secured by fair value collateral other than the securities purchased, and has been paid in full prior to the proposed Rule 144 sale date.
As another example, securities acquired from the Issuer as a dividend or pursuant to a stock split, reverse split or recapitalization shall be deemed to be acquired at the same time as the securities on which the dividend is paid or the securities surrendered in the recapitalization. If securities were acquired by the Issuer solely in exchange for other securities of the same Issuer, such as in a 3(a)(9) transaction, the newly acquired securities are deemed to be acquired at the same time as the securities surrendered in the exchange or conversion.
When relying on Rule 144 for the resale of over-the-counter traded securities (pinksheets or bulletin board), sellers may only sell 1% of the outstanding securities of the Issuer in every 90-day period. Calculations of volume restrictions based on trading volume are only available for the sale of exchange traded securities.
The manner of sale requirements require that securities sold in reliance on Rule 144 be sold only in broker’s transactions, directly with a market maker or in riskless principal transactions. Moreover, the person selling the securities may not arrange for the solicitation of any sale orders. The posting of a customer limit order is not considered a solicitation for purposes of this rule.
Finally, and importantly, Issuers and sellers must be aware that Rule 144 is not available to shell companies. A shell company is an Issuer with no or nominal operations or no or nominal non-cash assets. The rule is unavailable for the sale of securities initially issued by a shell company or any Issuer that has, at any time, previously been a shell company unless all the requirements of Rule 144(i)(2) are met. These requirements include that the Issuer no longer be a shell company, is subject to the reporting requirements of the Exchange Act for 12 months following the time that it filed Form 10 information indicating it was no longer a shell company, and is current with all Exchange Act reporting requirements.
The Author
Laura Anthony, Esq.
Founding Partner
Legal & Compliance, LLC
Corporate, Securities and Going Public Attorneys
LAnthony@LegalAndCompliance.com
Securities attorney Laura Anthony and her experienced legal team provides ongoing corporate counsel to small and mid-size private companies, OTC and exchange traded issuers as well as private companies going public on the NASDAQ, NYSE MKT or over-the-counter market, such as the OTCQB and OTCQX. For nearly two decades Legal & Compliance, LLC has served clients providing fast, personalized, cutting-edge legal service. The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions as well as registration statements on Forms S-1, S-8 and S-4; compliance with the reporting requirements of the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; Regulation A/A+ offerings; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers, ; applications to and compliance with the corporate governance requirements of securities exchanges including NASDAQ and NYSE MKT; crowdfunding; corporate; and general contract and business transactions. Moreover, Ms. Anthony and her firm represents both target and acquiring companies in reverse mergers and forward mergers, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. Ms. Anthony’s legal team prepares the necessary documentation and assists in completing the requirements of federal and state securities laws and SROs such as FINRA and DTC for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the OTC Market’s top source for industry news, and the producer and host of LawCast.com, the securities law network. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Las Vegas, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.
Contact Legal & Compliance LLC. Technical inquiries are always encouraged.
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Download our mobile app at iTunes.
Legal & Compliance, LLC makes this general information available for educational purposes only. The information is general in nature and does not constitute legal advice. Furthermore, the use of this information, and the sending or receipt of this information, does not create or constitute an attorney-client relationship between us. Therefore, your communication with us via this information in any form will not be considered as privileged or confidential.
This information is not intended to be advertising, and Legal & Compliance, LLC does not desire to represent anyone desiring representation based upon viewing this information in a jurisdiction where this information fails to comply with all laws and ethical rules of that jurisdiction. This information may only be reproduced in its entirety (without modification) for the individual reader’s personal and/or educational use and must include this notice.
© Legal & Compliance, LLC 2016
SEC Files Proceedings Against 19 S-1 Companies and Suspends Trading on 255 Shell Companies
A. S-1 Proceedings
On February 3, 2014, the SEC initiated administrative proceedings against 19 companies that had filed S-1 registration statements. The 19 registration statements were all filed with an approximate 2-month period around January 2013. Each of the companies claimed to be an exploration-stage entity in the mining business without known reserves, and each claimed they had not yet begun actual mining. The 19 entities used the same attorney, who is the subject of a separate SEC action filed in August 2013 alleging involvement in a pump-and-dump scheme. Each of the entities was incorporated at around the same time using the same registered agent service. The 19 S-1’s read substantially the same.
Importantly, each of the 19 S-1’s lists a separate officer, director and sole shareholder, and each claims that this person is the sole control person. The SEC complains that contrary to the representations in the S-1, a separate single individual is the actual control person behind each of these 19 entities and that person is acting through straw individuals, as he is subject to a penny stock bar and other SEC injunctive orders which would prevent him from legally participating in these S-1 filings. In addition, the SEC alleges that the claims of a mining business are false. Presumably, the SEC believes that the S-1’s were filed to create public companies to be used for illegal purposes.
The SEC is playing hardball with this group as well. Please change it to “An S-1 generally contains language that allows it to be amended or modified (or even withdrawn) until it is declared effective by the SEC. This pre-effective S-1 is not deemed filed by the SEC or a final prospectus for Section 5 and broker-dealer prospectus delivery requirements. Upon initiation of the SEC investigation, all 19 S-1 filers attempted to withdraw their S-1 registration statements. The SEC suggested that they withdraw their requests to terminate the S-1 and cooperate fully with the investigation. The entities did not comply. Accordingly, in addition to claims related to the filing of false statements in the S-1, the SEC has also alleged that “Respondent’s seeking to withdraw its Registration Statement constitutes a failure to cooperate with, refusal to permit, and obstruction of the staff’s examination under Section 8(e) of the Securities Act.”
It is likely that the filing of the 19 S-1 registration statements were efforts to create salable shell companies and not efforts for the pursuit of a mining business. Unfortunately, each time there is a change in the business surrounding small-cap entities, there will be a few unscrupulous players that will seek to illegally capitalize on policies that in general can benefit small business enterprises.
Recently, albeit not officially, the SEC has materially altered its position on offerings by shell companies that are not blank check companies. In particular, over the past year, numerous shell companies that are not also blank check companies have completed offerings using an S-1 registration statement and successfully obtained market maker support and a ticker symbol from FINRA and are trading. 18 months ago, this was not possible. The SEC’s change in policy coincides with the enactment of the JOBS Act and the general policy to encourage start-ups to embark on capital-raising transactions that were historically limited to more mature entities. The filing of an S-1 is or is associated with a capital raising transaction (either directly, or prior to the S-1 through a private placement offering).
Prior Shell Company Policy – Rule 419 and Blank Check Companies
The provisions of Rule 419 apply to every registration statement filed under the Securities Act of 1933, as amended, by a blank check company. Rule 419 requires that the blank check company filing such registration statement deposit the securities being offered and proceeds of the offering into an escrow or trust account pending the execution of an agreement for an acquisition or merger.
In addition, the registrant is required to file a post-effective amendment to the registration statement containing the same information as found in a Form 10 registration statement, upon the execution of an agreement for such acquisition or merger. The rule provides procedures for the release of the offering funds in conjunction with the post-effective acquisition or merger. The obligations to file post-effective amendments are in addition to the obligations to file Forms 8-K to report both the entry into a material non-ordinary course agreement and the completion of the transaction. Rule 419 applies to both primary and resale or secondary offerings.
Within five (5) days of filing a post-effective amendment setting forth the proposed terms of an acquisition, the Company must notify each investor whose shares are in escrow. Each investor then has no fewer than 20 and no greater than 45 business days to notify the Company in writing if they elect to remain an investor. A failure to reply indicates that the person has elected not to remain an investor. As all investors are allotted this second opportunity to determine to remain an investor, acquisition agreements should be conditioned upon enough funds remaining in escrow to close the transaction.
The definition of “blank check company” as set forth in Rule 419 of the Securities Act is a company that:
- Is a development-stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person; and
- Is issuing “penny stock,” as defined in Rule 3a51-1 under the Securities Exchange Act of 1934.
Shell Companies
The definition of “shell company” as set forth in Rule 405 of the Securities Act (and Rule 12b-2 of the Securities Exchange Act of 1934) means a Company that has:
- No or nominal operations; and
- Either:
- No or nominal assets;
- Assets consisting solely of cash and cash equivalents; or
- Assets consisting of any amount of cash and cash equivalents and nominal other assets.
Clearly the definitions are different. Although a shell company could also be a blank check company, it could be a development-stage company or start-up organization or an entity with a specific business plan but nominal operations. Until recently, however, the SEC has firmly held the position that Rule 419 applies equally to shell and development-stage companies.
In fact, the SEC Staff Observations in the Review of Smaller Reporting Company IPO’s published by the SEC Division of Corporate Finance contain the following comments:
“Rule 419 applies to any registered offering of securities of a blank check company where the securities fall within the definition of a penny stock under the Securities Exchange Act of 1934. We frequently reviewed registration statements of recently established development stage companies with a history of losses and an expectation of continuing losses and limited operations. These companies often stated that they may expand current operations through acquisitions of other businesses without specifying what kind of business or what kind of company. In other cases, the stage of a company’s development, when considered in relation to the surrounding facts and circumstances, may raise questions regarding the company’s disclosed business plan. We generally asked companies like these to review Rule 419 of Regulation C. We asked these companies either to revise their disclosure throughout the registration statement to comply with the disclosure and procedural requirements of Rule 419 or to provide us with an explanation of why Rule 419 did not apply.”
Change in SEC Policy
The SEC will now allow a shell company that is not also a blank check company to embark on an offering using an S-1 registration statement without the necessity to comply with Rule 419. As noted above, an entity can be a shell company, but not a blank check company, as long as it has a specific business purpose and plan and is taking steps to move that plan forward, such as a start-up or development-stage entity. In the last 18 months, several companies have filed S-1 registration statements with little more than a specific business plan, and such S-1’s have been declared effective, the shares have been successfully placed, and the company’s common stock is trading on the over-the-counter market. A review of the comment letters associated with these shell company S-1 filings has not shown a single comment requesting that the issuing company comply with or explain why they did not have to comply with Rule 419. Such entity will clearly need to disclose that it is a shell company as defined by Rule 405 of the Securities Act and accordingly, investors in the registered offering would not be able to rely on Rule 144 for resale unless all of the conditions of Rule 144(i) were met.[1]
The action against these 19 entities sends a clear message by the SEC: at the same time it opens the door to help legitimate small business capital formation, it will pursue those illegitimate individuals and entities that negatively impact the markets and reputation of the small-cap industry as a whole. In general, I continue to believe that the increased scrutiny by regulators may be just what the industry needed to weed out the unscrupulous players and invigorate the small-cap industry.
B. Shell Company Proceedings
On February 3, 2014, the Securities and Exchange Commission (SEC) suspended the trading in 255 dormant shell companies. The trading suspensions are part of an SEC initiative tabbed Operation Shell-Expel by the SEC’s Microcap Fraud Working Group. In May 2012, the SEC suspended the trading on 379 shell companies and in June 2013, it suspended 61 shell companies as part of the initiative. Each of the companies was a dormant shell that was not current in its public disclosures. Each of the companies failed to have adequate current public information available either through the news service on OTC Markets or filed with the SEC via EDGAR.
The federal securities laws allow the SEC to suspend trading in any stock for up to 10 business days. Once a company is suspended from trading, it cannot be quoted again until it provides updated information including complete disclosure of its business and accurate financial statements. Generally, this is accomplished through a Form 10 registration statement. The SEC comments on the Form 10 could be very difficult in light of the shell’s dormant history and trading suspension. Moreover, if there are new control people, the SEC is likely to question their intentions and review their background carefully to ensure that they are not either recidivists themselves or working on behalf of unknown third parties.
In addition to providing the necessary information, to begin to trade again, a company must enlist a market maker to file a new 15c2-11 application with FINRA. For a Company with a trading suspension, this is a difficult process. Many market makers are unwilling to take on the assignment and when they do, the comment process with FINRA can be lengthy. Moreover, even if a 211 application is approved by FINRA, the DTC may still refuse to qualify the security for electronic trading.
Bottom line: Short of a new registration statement and going public process, these companies have effectively been removed from the public company trading system.
The SEC continues to send the message that companies without current information will not be allowed to trade.
The Author
Laura Anthony, Esq.
Founding Partner
Legal & Compliance, LLC
Corporate, Securities and Going Public Attorneys
LAnthony@LegalAndCompliance.com
Securities attorney Laura Anthony and her experienced legal team provides ongoing corporate counsel to small and mid-size private companies, OTC and exchange traded issuers as well as private companies going public on the NASDAQ, NYSE MKT or over-the-counter market, such as the OTCQB and OTCQX. For nearly two decades Legal & Compliance, LLC has served clients providing fast, personalized, cutting-edge legal service. The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions as well as registration statements on Forms S-1, S-8 and S-4; compliance with the reporting requirements of the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; Regulation A/A+ offerings; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers, ; applications to and compliance with the corporate governance requirements of securities exchanges including NASDAQ and NYSE MKT; crowdfunding; corporate; and general contract and business transactions. Moreover, Ms. Anthony and her firm represents both target and acquiring companies in reverse mergers and forward mergers, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. Ms. Anthony’s legal team prepares the necessary documentation and assists in completing the requirements of federal and state securities laws and SROs such as FINRA and DTC for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the OTC Market’s top source for industry news, and the producer and host of LawCast.com, the securities law network. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Las Vegas, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.
Contact Legal & Compliance LLC. Technical inquiries are always encouraged.
Follow me on Facebook, LinkedIn, YouTube, Google+, Pinterest and Twitter.
Download our mobile app at iTunes.
Legal & Compliance, LLC makes this general information available for educational purposes only. The information is general in nature and does not constitute legal advice. Furthermore, the use of this information, and the sending or receipt of this information, does not create or constitute an attorney-client relationship between us. Therefore, your communication with us via this information in any form will not be considered as privileged or confidential.
This information is not intended to be advertising, and Legal & Compliance, LLC does not desire to represent anyone desiring representation based upon viewing this information in a jurisdiction where this information fails to comply with all laws and ethical rules of that jurisdiction. This information may only be reproduced in its entirety (without modification) for the individual reader’s personal and/or educational use and must include this notice.
© Legal & Compliance, LLC 2016