Navigating the complexities of an Initial Public Offering (IPO) requires meticulous attention to a myriad of provisions, each carrying significant implications for the company’s future as a public entity. The negotiation of these key provisions can be a delicate balancing act, involving the interests of the company, existing shareholders, underwriters and potential investors. Let’s delve … Read more
The journey of a company from private to public ownership through an Initial Public Offering (IPO) is a transformative process that marks a significant milestone in its evolution. This transition, often viewed as a coming-of-age moment in the business world, opens doors to vast pools of capital and heightened prestige, while simultaneously ushering in new … Read more
Ivan Boesky’s story came to an end on May 20, 2024, when he passed away at the age of 87. His legacy, however, lives on in the transformed landscape of securities regulation, a constant reminder of the consequences of greed and the SEC’s commitment to maintaining fair and transparent markets. In the 1980s, the name … Read more
There are important issues that need to be carefully considered and discussed with respect to SAFE (Simple Agreement for Future Equity) agreements. (Yes, I know that’s redundant.) Let’s take a look: Valuation Cap This is arguably one of the most critical aspects of a SAFE. The valuation cap essentially sets the maximum valuation at which … Read more
The Securities and Exchange Commission is taking aim at investment advisory firms that mislead investors about their use of artificial intelligence. In an enforcement action announced today, the SEC charged two firms – Delphia (USA) Inc. and Global Predictions Inc. – with making false and misleading statements about incorporating AI into their investment processes. From … Read more
Innodata Inc. is an American company, headquartered in New Jersey, that provides business process, technology and consulting services. A class action lawsuit has been brought against Innodata alleging securities fraud related to misrepresentation of the company’s AI technology and business prospects. The plaintiffs claim that between May 9, 2019, and February 14, 2024, the defendants … Read more
Non-fungible tokens (NFTs) represent unique digital assets that are typically used to represent ownership of digital art, collectibles, virtual real estate and other digital items. (For some background on NFTs see my primer.) Determining whether an NFT is a security is a complex and evolving legal question that depends on numerous factors and the jurisdiction … Read more
More on Reg D here.
NFTs are still hot. $37 billion of transactions in the first four months of 2022. So, what’s the story with NFTs? And how do you monetize them? We’ll get to that second question, but let’s start from the beginning. And check the glossary — on the right or below, depending on your device — for … Read more
You have a new business or you’re thinking about expanding your existing business. And you think it would be great to offer some shares or membership interest in your company to an outside investor. Nothing could be easier. Right? Wrong! You may be selling securities and will need to comply with federal and state securities … Read more
If a company wishes to raise funds by selling or offering its securities it must register those securities with the Securities and Exchange Commission. However, there are numerous exemptions to this requirement to register. There are different regulatory frameworks with different requirements and limitations, including the amount of money that can be raised, the amount … Read more
Generally speaking, if a company wishes to raise funds by selling or offering its securities it must register those securities with the Securities and Exchange Commission. However, there are numerous exemptions to this requirement to register. Although Reg D’s Rule 506 is the most widely used, there are also exemptions under Reg A, Rule 504 … Read more
Until recently, new companies wishing to raise money – that had exhausted their sources from friends and family and had no access to angel or venture capitalists – needed to rely on the SEC’s Regulation A or D, regulations promulgated under the federal Securities Act of 1933. Nothing wrong with that, except that offerings under … Read more
This post is a primer on crowdfunding for entrepreneurs and other people who are not securities lawyers. Securities I’ll start by talking a bit about securities and then about equity and non-equity offerings. Bear with me; we’ll get to crowdfunding. What is a security? The most common types of securities are stocks, bonds and notes. … Read more