New Regulation FD

In recent days (April 2 to be exact), the U.S. Securities and Exchange Commission (“S.E.C.“) issued a report that said that Regulation FD could be satisfied by issuers by posting disclosure to social media sites.  To us, this is a logical extension of the J.O.B.S. Act since its intention was to allow small companies to capitalize themselves through the larger reach of the Internet. The S.E.C. release, available at http://www.sec.gov/news/press/2013/2013-51.htm, provides more insight.

Regulation FD is very important for publicly traded companies – it basically states that all investors should receive good and proper information disclosure from publicly traded companies at the same time.  Only certain venues were considered proper outlets to post “Press Releases” and even information on the company’s website was limited and specified.  Nothing worse than getting a comment from the S.E.C. on a registration statement relating to improper disclosure on the company’s own website – news sections posting information news before the official press release or 8K, company newsletters that disclose something improperly, etc.  Here is the S.E.C.’s definition of Regulation FD (http://www.sec.gov/answers/regfd.htm).

Here are some simple rules that we train our client organizations to follow:

1. Create an “Investors” section of their website.  Link to other public venues for quotes, etc. such as Yahoo! Finance, Google Finance, Market Watch, OTC Markets.
   1. List board members, including committees.
   2. List transfer agent.
   3. List company’s SEC counsel.
   4. List company’s Ethics Statement.
2. Create a “News” section of website wherein only items that have been released officially through a Regulation FD authorized distributor, such as Market Wire, Mac Report, Business Wire, etc..
3. Create a “BLOG” section of website for opinions.
4. Always release information as follows:
   1. Issue 8K, if required.
   2. Issue press release through FD authorized distributor.
   3. Put exact copy of press release on company’s website.
   4. Put exact copy or link to press release on LinkedIn and Facebook company pages.
      

      Image via CrunchBase

Disclosure is a “by the numbers” issue, meaning every company should come

Image via CrunchBase

up with a standard operating procedure (“SOP”) and follow it religiously – more to ensure that news gets the largest reach but also to ensure that a company doesn’t go afoul of the authorities.

Related Articles

• The Green Light to Social Media Use for Regulation FD Purposes Looks More Like Yellow (securitiesnewswatch.com)
• The Board, Social Media and Regulation FD (blogs.law.harvard.edu)
• Social media to be allowed for SEC fair disclosure (bizjournals.com)
• Twitter, Facebook OK to use for news – SEC (buzz.money.cnn.com)
• Regulation FD in the Age of Facebook and Twitter (blogs.law.harvard.edu)
• Did The SEC Just Issue Double Secret Guidance For Using Social Media? (somelaw.wordpress.com)
• Corporate disclosure via social media (professorbainbridge.com)

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The JOBS Act presentation by The International Law Firm of Fulbright & Jaworski

I ran across this presentation (The International Law Firm of Fulbright & Jaworski – Events) coming up and thought that anyone that deals with securities needs to be there (if you received a LinkedIn Invitation from me, take a look at it).  Here is an excerpt from their e-mail touting the presentation:

Recent changes in securities laws affect venture capital firms, angel investment groups, start up and early stage technology companies and emerging growth companies planning to go public (under $1.0 billion in revenue).

The JOBS Act enacted in April significantly changes U.S. securities laws, making it easier for companies to raise capital in private placements and to complete IPOs by:

• Mandating that the SEC adopt rules allowing general solicitation
  of investors for certain private placements;
• Creating rules to allow crowd funding;
• Increasing the number of shareholders a company can have before
  triggering public filing requirements;
• Increasing the size of Regulation A offerings from $5 million to $50 million;
• Allowing registration statements to be filed confidentially;
• Allowing IPO companies to “test the waters” to gauge investor interest;
• Reducing the number of years of financial data required for an IPO from
  five years to two years; and
• Substantially reducing some of the disclosure requirements for IPOs.

If you may be seeking capital or contemplating an IPO in the near future, come hear how the landscape has changed.

Speakers:
Brian Fenske, Partner, Fulbright & Jaworski L.L.P.
Gerry Pecht, Partner, Fulbright & Jaworski L.L.P.
Chuck Powell, Partner, Fulbright & Jaworski L.L.P.
Peter Stokes, Partner, Fulbright & Jaworski L.L.P.

Registration:
This seminar is offered at no charge to clients and friends of Fulbright. Seating is limited, so reservations will be accepted in the order received. To reserve a space now, please click here. For more information please contact Jessica Schwartz at
jnschwartz@fulbright.com or 713 651 5550.

The International Law Firm of Fulbright & Jaworski – Events.

Related articles

• The JOBS Act (rhodesholdings.wordpress.com)

 

The JOBS Act

"Dr. Coburn and President Obama look over the Federal Funding Accountability and Transparency Act" (Photo credit: Wikipedia)

Summary

The Fulbright & Jaworski law Firm put out an excellent newsletter article “The JOBS Act and its Effect” by Gregg J. Berman and Donal Ainscow (linked here by permission).  This article really does a good job (no pun intended) in summarizing the bill, soon to be signed by Obama who promised to sign the bill into law on Thursday.

Intended consequences

One of the interesting consequences is that the bill requires that the individual soliciting to sell their securities “…must use broker or funding portal“.  So, in looking at the funding portals that would be out there right now, I have found:

• PPM Logix – an example of a merchant website that sells access to its bookshelf of legal documents, but also allows individuals and companies who are members (paid to access the library) can list their PPM for other accredited investors.  Good idea, well their products are good but being a funding portal is a stretch – not enough qualified investors to make it worth your while.
• Merger Network (website, LinkedIn Group) – this is a website and associated LinkedIn group that provides a great place to list businesses for sale, so solicitations are not a stretch.  With over 1,400 active members, the discussions and the businesses listed are a great source of deal flow.

And then there are the full time funding portals and portals to resell restricted securities in private sales:

• Shares Post
• XPERT Financial
• Liquid Net – more for institutional investors

Earlier in the year, these came up in a search for shares in the Facebook before they announced their upcoming IPO.  There had been a robust market for the Facebook shares due to their huge run-up in value.