Helping Clients Access the Capital Markets and Stay Apprised of Regulatory Developments

SEC Proposes Further Relief for Low Revenue Smaller Reporting Companies

On May 9, 2019, the SEC proposed rule changes to the disclosure requirements for smaller reporting companies (SRCs).  Last year, the SEC expanded the number of companies that qualify for scaled disclosure accommodations under SEC rules by increasing the public float and revenue caps in the SRC definition (from $75 million up to $250 million of public float or up to $700 million of public float with $100 million or less in revenues).

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SEC Proposes Changes to Disclosures for Acquisitions and Dispositions

On May 3, 2019, the SEC proposed rule amendments to financial information that investors receive regarding the acquisition and disposition of businesses.  The SEC’s rules requiring target company and pro forma financial statements are complex.  Creating the financial statements often results in significant delay and expense in M&A situations.  The SEC’s proposed changes are intended to address these difficulties.

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Locke Lord QuickStudy: Exchangers Beware: FinCEN Issues First Fine Against a P2P Virtual Currency Exchanger

On April 18, 2019, the Financial Crimes Enforcement Network (“FinCEN”) announced1 a civil monetary penalty against an individual for operating a peer-to-peer virtual currency exchanger. FinCEN assessed a $35,350 civil monetary penalty against Eric Powers of Kern County, California for willfully violating registration and reporting requirements under the Bank Secrecy Act (“BSA”).

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Locke Lord QuickStudy: Token Taxonomy Act – Exempting Digital Tokens from U.S. Securities Laws

On April 10, 2019, U.S. Representatives Warren Davidson (R-OH) and Darren Soto (D-FL) ‎reintroduced the Token Taxonomy Act1‎ (“TTA”) in the effort to amend the Securities Act of ‎‎1933 and the Securities Exchange Act of 1934 to exclude “digital tokens” from the definition of ‎a security and provide tax certainty on such assets.

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Corp Fin Issues Guidance on How to Redact Your Material Contracts Without Filing a Confidential Treatment Request

Late last month we blogged about rule amendments adopted by the Securities and Exchange Commission that are intended to modernize and simplify disclosure requirements for public companies, including an amendment that allows registrants to redact confidential information from most exhibits without filing a confidential treatment request.

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SEC Clarifies How to Tell When a Token is a Security – A New Framework

On April 3, 2019, the Securities and Exchange Commission’s (the “SEC”) Division of Corporation Finance ‎‎(“Division”) issued a Statement ‎ with a “Framework for ‘Investment Contract’ Analysis of Digital ‎Assets” (the “Framework”) for the application of U.S. federal securities laws to blockchain and ‎distributed ledger technologies.‎

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The SEC Modernizes and Simplifies Disclosure

On March 20, 2019, the Securities and Exchange Commission (SEC) adopted amendments to modernize and simplify disclosure requirements for public companies, investment advisers, and investment companies.  The amendments, consistent with the SEC’s mandate under the Fixing America’s Surface Transportation (FAST) Act, are based on recommendations in the staff’s FAST Act Report as well as a broader review of the Commission’s disclosure rules.

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Disclosure Violations Arising from Operational Wrongdoing

The recent SEC enforcement action against Volkswagen AG and its former CEO illustrates the ‎securities law consequences of operational wrongdoing.‎ ‎ As described by the SEC, from at least ‎‎2007 through 2015, Volkswagen sold “clean diesel” cars while concealing their emissions ‎problems through use of an undisclosed defeat device.

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