KMK Law Corporate & Securities Blog

On April 30, 2019, the U.S. Department of Justice (“DOJ”) released new guidance detailing its evaluation of the adequacy and effectiveness of a company’s compliance program (the “Guidance”). The Guidance spells out how prosecutors examine compliance programs when deciding whether to monitor, fine or file criminal charges against a company, and we believe the 18-page document is the most comprehensive and detailed corporate compliance document that informs all businesses, whether or not party to a DOJ enforcement action. The Guidance includes a step-by-step ...

On April 3, 2019, the SEC announced the framework it would use to determine whether a digital asset would be considered an “investment contract” in light of the Supreme Court’s ruling in SEC v. W.J. Howey Co. and subsequent case law. Howey found that an “investment contract” exists where there is an investment of money in a common enterprise with a reasonable expectation that profits will be derived from others’ efforts.  In applying the framework to digital assets, the SEC focuses on three main prongs. First, in determining whether there is a reliance on the efforts of ...

On June 19, 2019, the SEC issued a concept release seeking comment on possible ways to simplify, harmonize, and improve the exempt offering framework to promote capital formation. The release requests comment on whether there should be any changes to improve Regulation D, Regulation A, the intrastate offering exemptions and Regulation Crowdfunding.

On May 9, 2019, the SEC voted to propose amendments to the definitions of accelerated filer and larger accelerated filer. The cost-reducing effects of the proposed amendments are discussed below. 

The amendments would exclude from the accelerated and large accelerated filer definitions certain issuers who are eligible to be smaller reporting companies and had no revenues or annual revenues of less than $100 million in the most recent fiscal year for which audited financial statements are available.  Additionally, for accelerated and large accelerated filers becoming ...

On May 3, 2019 the SEC proposed amendments to Regulation S-X to simplify financial disclosure requirements for public companies relating to acquisitions and dispositions of businesses.  Among other changes, the amendments would modify the significance tests applicable to acquisitions as set forth in Rule 3-05 of Regulation S-X, which sets forth the number of years of financial statements of the acquired business that must be filed with the SEC. Specifically, the proposal would amend (i) the investment test to require a comparison of a company’s investment in an acquired ...

On April 2, 2019, the SEC adopted new rules allowing for the filing of redacted material contracts without the need to apply for confidential treatment.  The rules, included in Item 601(b) of Regulation S-K, provide that information contained in material contracts may be redacted, provided the redacted information (i) is not material and (ii) would be competitively harmful if publicly disclosed.  In order to properly redact such information, companies must comply with specific requirements, including marking the exhibit index of the filing to indicate that portions of a contract ...

On July 17, 2018, the U.S. House of Representatives passed the “JOBS and Investor Confidence Act of 2018.” This bill is the third piece of the “Jumpstart Our Business Startups (JOBS) Act” legislation, and its aim is to reform capital markets to assist small businesses and entrepreneurs in accessing capital. The bill is set to be voted on by the Senate during the fall and will become effective 90 days after it is signed by the President.

Several companies have asked us about the status of registrations and qualifications of security token offerings (STOs) / initial coin offerings (ICOs) with the Securities and Exchange Commission. There is not much to report.

On March 7, 2018, the Securities and Exchange Commission (SEC) issued a public statement regarding the risk posed by online platforms that allow trading in digital assets to violate federal securities laws. This statement indicates that the SEC is increasing its focus on platforms that offer such trading and their compliance with applicable securities laws.

Beginning on July 10, 2017, the Securities and Exchange Commission’s (“SEC”) Division of Corporation Finance will accept nonpublic draft registration statements from all issuers relating to IPOs and initial registrations under Section 12(b) of the Securities Exchange Act of 1934 (“Exchange Act”).