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CALIFORNIA CORPORATE & SECURITIES LAW

Does Placing Non-GAAP Financial Measures First Violate The Law?

Yesterday’s post discussed the SEC staff’s recently announced position that Item 10(e)(1)(A) of Regulation S-K requires that issuers disclose comparable GAAP financial measures before non-GAAP financial measures. Item 10(e)(1)(A) requires only that issuers afford GAAP financial measures “equal or greater prominence” as non-GAAP measures.  What then is the legal significance of the staff’s position that GAAP…

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The SEC’s Sorcerer’s Stone – Changing EBITDA From A Performance Measure Into Liquidity Measure

Recently, Broc Romanek hosted another one of his excellent webcasts.  This one covered the SEC’s Division of Corporation Finance’s recent issuance of several new and modified Compliance & Disclosure Interpretations regarding Non-GAAP financial measures.  The three panelists were Mark Kronforst, Chief Accountant, SEC’s Division of Corporation Finance Meredith Cross, Partner, WilmerHale LLP, and Dave Lynn, Editor, TheCorporateCounsel.net and…

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Did The SEC Staff Bypass The APA In Issuing New And Revised Non-GAAP Financial Measure C&DIs?

Earlier this week, the staff of the SEC’s Division of Corporation Finance issued several new, and rewrote several existing, Compliance and Disclosure Interpretations (“C&DIs”) relating to Non-GAAP Financial Measures.  Recently, the SEC has been signaling that it intends to crack down on company disclosures of Non-GAAP Financial Measures.  While some are likely to welcome additional guidance…

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SEC Staff Declares Performance History Is Not Factual

The Securities and Exchange Commission staff recently issued a series of additional Compliance and Disclosure Interpretations with respect to what might constitute a “general solicitation” under Regulation D.  These interpretations illustrate the logical contortions that must be endured when trying to regulate speech.  After admitting that an issuer may disseminate factual information about itself, the…

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Why The SEC’s Pre-Existing Relationship Test Is The Mirror Image of California’s

One significant condition to California’s limited offering exemption is that all purchasers have a “pre-existing relationship”: All purchasers either have a preexisting personal or business relationship with the offeror or any of its partners, officers, directors or controlling persons, or managers (as appointed or elected by the members) if the offeror is a limited liability…

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“Kid, Did You Ever Go To Court?”

In a recently issued Compliance & Disclosure Interpretation (Question #260.21), the SEC staff unequivocally stated that disqualification under Rule 506(d)(1)(v) is “triggered only by orders to cease and desist from violations of scienter-based provisions of the federal securities laws, including scienter-based rules.”  Quick, list all of the scienter-based federal securities laws and rules.  I can’t.  If there’s…

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New Rule 506 C&DI’s Require Some Explaining

Nancy Wojtas, the head of the public companies group at Cooley LLP, alerted me to the fact that the SEC staff yesterday issued 14 new Compliance & Disclosure Interpretations (C&DIs) relating to Rule 506 under Regulation D.  Here’s my take on three of them. Question 260.15 Question: If a placement agent or one of its covered control persons,…

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Rule 134 And Suitability Disclosure

Recently, I came across the following Compliance and Disclosure Interpretation (C&DI) issued by the Division of Corporation Finance at the Securities and Exchange Commission: 510.04 Although suitability requirements are not permitted under a literal reading of Rule 134, Rule 134(a)(16) does permit the inclusion of “any statement or legend required by any state law or…

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A Brief Rumination On Metaphysics, Trusts and Accredited Investors

I know that the practice of law requires a bit of abstract thinking.  However, sometimes this abstract thinking takes a sharp turn into the metaphysical, if not the absurd.  One such example is the SEC Staff’s Compliance and Disclosure Interpretation addressing who qualifies as an accredited investor as defined by Rule 501 of Regulation D.  First,…

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More About the Effectiveness of Section 413(a)

Yesterday, I wrote about the Compliance & Disclosure Interpretation (“C&DI”) issued last week by the staff of the SEC’s Division of Corporation Finance.  In the C&DI, the staff clearly takes the position that the exclusion of an investor’s primary residence from the calculation of net worth takes effect immediately. My own view is that Section…

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