Topic: Private Placements

SEC Proposes to Broaden and Update Accredited Investor Definition

On December 18, 2019, the Securities and Exchange Commission, on a 3 to 2 vote, proposed ‎amendments to the definition of “accredited investor” in order to update that definition and ‎expand the investors that would qualify as accredited investors able to participate in private ‎offerings.‎ ‎ The definition of “accredited investor” is important principally for determining who ‎can invest in private offerings under Rule 506(b) without limitation as to number and without ‎any information required as a condition of the exemption and as to who is eligible to invest in an ‎offering with general solicitation under Rule 506(c).‎

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NASDAQ’s New 20% Rule for Private Offerings

On September 26, 2018, the Securities and Exchange Commission approved amendments (the “Amendments”) to NASDAQ Rule 5635(d) (commonly referred to as the “20% Rule”).  The purpose of the 20% Rule is to protect an issuer’s existing public shareholders against a significantly dilutive private offering by giving the shareholders an opportunity to vote on the offering and/or sell their stock prior to its consummation.

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