May 14, 2020

Private Placements

Private Placements

A Substantial Compliance ("I&I") Defense and Other Changes Are Added to SEC Regulation D
      Carl W. Schneider, 44(4): 1207–21 (Aug. 1989)
If a private placement of securities structured to comply with regulation D is imperfect in any respect, the issuer has been exposed to the potential for horrendous civil rescission claims from all purchasers. The SEC recently added rule 508, which provides a substantial good-faith compliance defense to civil liability claims, but not enforcement actions, in the case of certain insignificant defects. Although less than perfect, the new rule reasonably balances a number of competing interests and responds in substance to a suggestion for a rule initiative made by Mr. Schneider in The Business Lawyer in 1973 to create a so-called I&I Defense in the event of innocent and immaterial defects. See Carl W. Schneider & Charles C. Zall, Section 12(1) and the Imperfect Exempt Transaction: the Proposed "I&I" Defense , 28 BUS. LAW. 1011 (1973).

Private Placement Guidelines—A Lawyer's Letter to a First- Time Issuer
      Marc H. Morgenstern, 48(1): 257–76 (Nov. 1992)
This Article is in the form of a sample letter from a lawyer to a first-time issuer of securities in a private placement conducted under section 4(2) or rule 506 of the Securities Act. Comments and suggestions are offered to clients and their lawyers.

Cross–Border Tender Offers and Other Business Combination Transactions and the U.S. Federal Securities Laws: An Overview
      Jeffrey W. Rubin, John M. Basnage, and William J. Curtin, III, 61(3):1071—1134 (May 2006)
In structuring cross–border tender offers and other business combination transactions, parties must consider carefully the potential application of U.S. federal securities laws and regulations to their transaction. By understanding the extent to which a proposed transaction will be subject to the provisions of U.S. federal securities laws and regulations, parties may be able to structure their transaction in a manner that avoids the imposition of unanticipated or burdensome disclosure and procedural requirements and also may be able to minimize potential conflicts between U.S. laws and regulations and foreign legal or market requirements. This article provides a broad overview of U.S. federal securities laws and regulations applicable to cross–border tender offers and other business combination transactions, including a detailed discussion of Regulations 14D and 14E under the Securities Exchange Act and the principal accommodations afforded to foreign private issuers thereunder.

No Registration Opinions Special Report
      Subcommittee on Securities Law Opinions, committee on Federal Regulation of Securities, ABA Section of Business Law, 63(1): 187–194 (November 2007)

Testing the Limits of NSMIA Preemption: State Authority to Determine the Validity of Covered Securities and to Regulate Disclosure
     Robert N. Rapp and Fritz E. Berckmueller, 63(3): 809–854 (May 2008)
The National Securities Market Improvements Act of 1996 ("NSMIA") significantly limited the scope of state securities regulation under blue sky laws. NSMIA preempted state authority over the registration and qualification of securities offerings deemed "national" in character and established categories of "covered securities" for the purpose of setting those limits. NSMIA includes among "covered securities" those securities offered and sold pursuant to Rule 506 of Regulation D under the Securities Act of 1933. Recent state and federal courts have determined that the issuer must show the actual validity of, and not mere reliance on, the exemption and, just as important, have recognized that states may determine whether the exemption applies and exercise registration–related enforcement authority where the exemption is ruled invalid.

At the same time, NSMIA expressly preserves general state antifraud enforcement authority. Some courts have upheld the state's exercise of antifraud enforcement authority to prohibit specific fraudulent issuer disclosure documents within the state in an offering of NSMIA "covered securities."

These two sets of cases set up a confrontation between the historic mission of blue sky laws and the intended scope of NSMIA preemption that opens the door to reconsideration of the purpose of NSMIA. We call for a balance of federal and state regulatory authority that is consistent with the actual realignment of roles that NSMIA was designed to accomplish.

Law of Private Placements (Non–Public Offerings) Not Entitled to Benefits of Safe Harbors—A Report
      committee on Federal Regulation of Securities, ABA Section of Business Law, 66(1): 85–124 (November 2010)

No Registration Opinions (2015 Update)
     Report of the Subcommittee on Securities Law Opinions, Federal Regulation of Securities committee, ABA Business Law Section; 71(1): 129-138 (Winter 2015/2016)

The Post Dodd-Frank Act Evolution of the Private Fund Industry: Comparative Evidence from 2012 and 2015
     Wulf A. Kaal, 71(4): 1151-1206 (Fall 2016)
This comparative survey study examines the private fund industry’s reactions and adjustments to a rapidly evolving regulatory framework, three years after the first application of mandatory registration and disclosure rules for private fund advisers under the Dodd-Frank Act. Using two datasets (2012: N = 94; 2015: N = 69) for a population of 1267 registered investment advisers to add an historical time series perspective, the author analyzes and compares survey respondents’ short- and long-term estimations of industry effects. The data suggest that immediate and short-term concerns have given way to adaptation to the changes.