Free Writings + Perspectives

News and Views on Securities Regulation and Capital Formation

On January 18, 2019, Congresswoman Maxine Waters and Congressman Patrick McHenry introduced legislation that would require the Securities and Exchange Commission (the “Commission”) to carry out a study of Rule 10b5-1 trading plans. Rule 10b5-1 trading plans are passive investment agreements that provide an affirmative defense for companies and insiders (directors, officers and affiliated shareholders) transacting in the relevant company’s securities from claims brought under the Exchange Act. Currently, any person or entity can establish…
On January 10, 2019, the staff of NYSE Regulation released its annual memorandum detailing important rules and policies applicable to listed companies. The memorandum provides helpful reminders for issuers (noting important rule differences for domestic and foreign private issuers) with securities listed on the NYSE and also highlights new compliance items. In particular, as previously announced, the memorandum notes that NYSE-listed companies are now required to provide notice to the NYSE at least ten minutes…
On December 21, 2018, the Securities and Exchange Commission (the “SEC”) appointed Martha Legg Miller as the Advocate for Small Business Capital Formation. As the first individual appointed to the new role, Miller will assist small businesses in accessing and navigating capital markets and identify the challenges that they face in doing so. Additionally, Miller will suggest regulatory changes to better accommodate the interests of small businesses. The position was created along with the Office…
Before the SEC shutdown, the Office of the Investor Advocate published the annual report on its activities during 2018. The report addresses non-GAAP financial measures and key performance indicators. The report notes that some investors find value in non-GAAP financial measures; however, others are troubled by inconsistent and changing disclosures and would like to see greater standardization that would permit comparisons to be more easily made. The report suggests continue attention be paid to the…
The recently published MoneyTree Report provides an overview of venture capital investment trends. In 2018, VC-backed companies raised $99.5 billion, an increase in annual funding of 30%, despite a decline in the number of deals. In 2018, the number of early-stage deals declined, but the number of later-stage deals increased. There were 184 “mega-rounds” completed in 2018, or funding rounds of $100 million or more. Globally, there were 382 mega-rounds completed in 2018 although overall…
Tuesday, February 26, 2019 Registration: 8:30a.m. – 9:00 a.m. Program: 9:00a.m. – 10:00 a.m. Location Mayer Brown LLP 1221 Avenue of the Americas, New York, NY 10020 Successful privately held companies considering their liquidity opportunities or eyeing an IPO often turn to late stage private placements. Late stage private placements with institutional investors, cross-over investors and strategic investors raise a number of considerations distinct from those arising in earlier stage and venture financing transactions. Privately…
In a recent cease and desist order accompanied by a $100,000 civil penalty, the US Securities and Exchange Commission (SEC) gave a strong reminder of the importance of providing equal or greater prominence to the most directly comparable financial measure calculated and presented in accordance with Generally Accepted Accounting Principles (GAAP) in disclosures containing non-GAAP financial measures, including earnings releases. This Legal Update discusses SEC rules and guidance applicable to this order. To learn more,…
In December 2018, Bill 3718 (the “Bill”) was introduced in the Senate and referred to Committee. The Bill, or the “Ban Conflicted Trading Act,” prohibits members of Congress and senior congressional staff from trading individual stocks and other investments while in office. Specifically, the Bill prohibits such covered persons from (1) purchasing or selling any security, commodity, future, or derivative and (2) entering into a transaction that creates a net short position in any security.…
Thursday, February 7, 2019 1:00 p.m. – 2:00 p.m. ET The U.S. capital markets remain an attractive source of capital for emerging companies in the life sciences sector. Over 21.7% of the 2017 IPOs were life sciences companies. Many of these IPOs were preceded by late stage (or mezzanine) private placements made principally to U.S. institutional investors. In our session, partners Anna Pinedo and David Bakst will focus on: Financing alternatives for pre-IPO companies; The late-stage…
All communications by FINRA member firms are subject to the communications rule—Rule 2210—which has approval and review, recordkeeping, filing and content standards. The rule also includes exceptions from many of its requirements. In recent years, FINRA has updated its advice relating to the use of social media by member firms, in response to the rapidly changing social media landscape. The rule covers a firm’s communications to retail and institutional investors, and many of the requirements…