January 23, 2008

Course Materials Now Available: Rule 144 Conference

With our blockbuster Conference only a week away – “New Rule 144: Everything You Need to Know – And Do NOW” – we have posted our Course Materials so that you can print them out in advance. If you have registered for the Conference, please use your ID and password to access these “Course Materials,” including this printable set of model documents. (Note you need to register for the Conference to access these Materials; members of receive a discounted rate, but the Conference is separate from membership.)

In addition to a “Comprehensive Rule 144 Outline,” nifty charts and useful analysis, the Course Materials include these model documents:

– Model Memorandum to Directors and Executive Officers
– Seller’s Representation Letter #1 – Sales by Affiliate of Reporting Company
– Seller’s Representation Letter #2 – Sales by Affiliate of Non-Reporting Company
– Seller’s Representation Letter #3 – Sales of Restricted Securities by a Non-Affiliate
– Standard Broker’s Representation Letter for Affiliates: “We Will Comply” Letter
– Legend Removal Representation Letter #4.a – to Broker
– Legend Removal Representation Letter #4.b – to Issuer and Transfer Agent
– Legend Removal Broker’s Cover Letter #5 – to Transfer Agent and Issuer
– Broker Instruction/Representation Form
– Letter: Reminder of SEC Restrictions and Company Policy (can be stapled to stock certificate, etc.)

The Course Materials alone are worth the rate of this Conference. You will need all of these documents starting February 15th, when new Rule 144 becomes effective.

New Rule 12h-6: Deregistration Stats So Far

Last week, Corp Fin Director John White gave this speech at PLI’s Annual European conference, which provides a solid recap of the SEC’s international efforts in the corporate finance area. (Chairman Cox also recently delivered this speech entitled “International Business — An SEC Perspective.”)

In his speech, John notes that 100 companies have filed to withdraw from U.S. registration under the SEC’s new deregistration rules during 2007 (which doesn’t include 25 that had previously deregistered under the older exit rules but filed a Form 15F to gain the benefit of new Rule 12h-6). The 100 FPIs represent just under 9% of all FPIs as of the beginning of 2007 and 53% are from the European Union.

It is notable that during 2007, more than 75 new foreign private issuers registered securities in the US. So perhaps it’s too early to tell what the long-term impact of new Rule 12h-6 will be…

Probable Cause for Car Search: No Broker-Dealer License

I’ve heard of getting into trouble driving with a driver’s license – but driving with a broker-dealer license? Keith Bishop notes: I thought that this recent California case was interesting for several reasons:

1. The Court of Appeal found that the police had probable cause that the defendant was selling securities without a broker-dealer license and could lawfully search the defendant’s vehicle in connection with his arrest.

2. The appellate court upheld a burglary conviction based on the fact that the defendant entered the victim’s home to solicit an investment.

3. The court ruled that violation of California’s broker-dealer registration requirement (Cal. Corp. Code Sec. 25210) is a general intent crime. Thus, guilty knowledge is not an element of the crime. (For example, the defendant does not have to know that he or she is selling securities.) However, the defendant’s good faith believe that he or she is not required to be licensed is an affirmative defense.

4. It should be noted that the defendants’ failure to disclose that they lacked a B-D license also supported criminal convictions for selling securities by false statements or omissions (Cal. Corp. Code Sec. 25401).

– Broc Romanek