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SEC Takes First Significant Steps Toward Crowdfunding
Recently finalized rulemaking by the SEC to implement Section 201(a)(1) of the Jumpstart Our Business Startups Act, Pub. L. No. 112-106, '201(a), 126 Stat. 306, 313 (Apr. 5, 2012) (the JOBS Act), allows issuers of securities to engage in general solicitation and advertising to accredited investors in some private placement offerings of securities. See, “Eliminating the Prohibition Against General Solicitation and General Advertising in Rule 506 and Rule 144A Offerings,” Release No. 33-9354 (Aug. 29, 2012), [hereinafter New Rule 506(c) ]. This advertising activity was previously prohibited under the widely used private placement exemption of SEC Rule 506, enacted under Regulation D to perfect exemption from the registration requirements of the Securities Act of 1933, as amended. Although the SEC's announcement leaves several notable questions unanswered, Rule 506(c) has the potential to enhance the utility of investment programs in the franchise world.
Rule 506(c) now permits securities issuers to use general advertising and solicitation, typically manifested as published advertisements, articles and notices in newspapers, magazines and other broadcast media. 17 C.F.R. 230.502(c). This will enable crowdfunding ventures and franchisors to reach a greater audience in marketing investments in their businesses. However, these issuers may sell only to accredited investors (New Rule 506(c), supra note 2), purchasers of securities who possess, or who the issuer reasonably believes immediately before the sale of securities possess, “such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment.” 17 C.F.R. 230.501(a); 17 C.F.R. 230.506(b)(2)(ii).
New Rule 506(c) is noteworthy because sellers of securities are required to “take reasonable steps to verify that purchasers of securities ' are accredited investors.” New Rule 506(c), supra note 2. Unlike existing Rule 506 offerings, there is no 35-individuals exception for non-accredited investors under Rule 506(c). Compare 17 C.F.R. 230.506 with New Rule 506(c). Unfortunately, too, administrative guidance surrounding the new Rule somewhat muddles the verification process for accredited investors, although the SEC's release provides a non-exhaustive list for what constitutes “reasonable verification”: Id.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Anti-Assignment Override Provisions
UCC Sections 9406(d) and 9408(a) are one of the most powerful, yet least understood, sections of the Uniform Commercial Code. On their face, they appear to override anti-assignment provisions in agreements that would limit the grant of a security interest. But do these sections really work?