For many U.S. issuers that have been in operation for six months or longer, raising much-needed funds through Regulation Crowdfunding has gotten easier. In response to feedback from established U.S. small business owners struggling during the COVID-19 pandemic and related shutdowns, the Securities and Exchange Commission (SEC)'s temporary final rules now offer conditional relief easing and expediting the offering process for said issuers.
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Sadly, in times of uncertainty, scams are rampant as tricksters exploit our COVID-related fears, anxieties, and hopes. In fact, the U.S. Federal Trade Commission (FTC) received 18,235 COVID-related reports this year, adding up to $13.44 million USD in combined losses due to fraud. The Securities and Exchange Commission (SEC)’s Office of Investor Education and Advocacy (OIEA) and the Division of Enforcement’s Retail Strategy Task Force jointly issued a special investor alert on April 10, focusing specifically on COVID-related investment scams.
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China’s Blockchain-based Service Network (BSN) is now ready for businesses to use globally. Shan Zhiguang, chairman of the Blockchain Service Network Development Alliance, announced the public launch on April 25, together with government officials and organizational leaders. The global infrastructure behind this new Chinese initiative will allow companies to develop and run blockchain applications more quickly, and at a lower cost than ever. Six months of beta testing proceeded the launch, during which over 2,000 developers got to try out the BSN, according to Cointelegraph.
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Originally intended as COVID-19 relief loans for smaller companies lacking other funding options, the Paycheck Protection Program (PPP) implemented in the United States as part of the federal CARES Act, has also lent money to quite a few large firms. Amid the controversy, some of these larger companies have returned the PPP money. While many of them have been coerced into giving back the funds, others would defy the critics and hold out against the naysayers. We are here to share more information about the situation and will also let you in on some program updates that are of critical importance to small business owners.
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We are glad to inform you that the Securities and Exchange Commission (SEC) is hosting a virtual event in an effort to bring the public and private sectors together. The 39th Annual Government-Business Forum on Small Business Capital Formation is a great opportunity to create public policy solutions that provide much-needed support for emerging businesses and their investors.
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First, let’s talk about the fact that issuers of securities that utilize accredited investors have many more options in the private placement market compared with non-accredited investor-related offerings. Many of these options are exempt from SEC registration requirements. For instance, securities offered under the exemption in Rule 506(c) of Regulation D may be publicly advertised, but they are only open to accredited investors.
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Here’s an essential question for anyone issuing multiple securities transactions: must the transactions be included in one single offering? To answer this question, issuers must refer to the myriad rules and Securities and Exchange Commission (SEC) guidance documents that make up the current Securities Act integration framework for registered and exempt offerings. There is a complicated process in place that issuers must follow to answer the question. In March of 2020, to provide issuers with a clearer and more straightforward answer, the Commission proposed a “general principle of integration,” as well as four new safe harbors from integration.
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Because broad solicitation and advertising are very important to many issuers of private placement offerings, Rule 506(c) of Regulation D of the Securities Act is a popular exemption from SEC registration requirements. Now, a newly proposed addition to the list of Rule 506(c) investor verification methods is expected to ease the process. Additionally, we’ll cover other situations when the rule requires fewer verification steps than usual.
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In the private placement world, the Regulation A market is sizeable. In total, issuers of Regulation A offerings reported raising around $2.4 billion USD in 382 qualified offerings between June 2015 and December 2019. Notably, nearly 91% of those funds were for higher capital offerings raised under Tier 2, so that’s where the Securities and Exchange Commission (SEC) focused its proposed changes to Regulation A. Here’s how offering limits might increase and why.
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Recently proposed Securities and Exchange Commission (SEC) rules would allow issuers to vet their investors more efficiently, gauging market interest while saving time and money. Notably, as explained in the SEC’s recently proposed amendments released in March, Rule 148 would expand the “demo day” provisions, while Rule 241 would expand the “test-the-waters” accommodations.
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