February 13, 2013

The NYSE’s Annual Corporate Governance Letter

On Monday, the NYSE sent its annual corporate governance letter, highlighting considerations for NYSE-listed issuers as the annual shareholders’ meeting season approaches. Here is the letter for foreign private issuers.

Senate Banking Committee Sets Its Agenda

Yesterday, the Senate Banking Committee announced its agenda for this term of Congress. Not sure it really says all that much…

SEC Issues FAQs on Broker-Dealer Registration Exemption for Rule 506 Offerings

David Jenson of Leonard, Street and Deinard provides us this blog about how the SEC released FAQs last week regarding Section 201 of the JOBS Act, which offers a new limited exemption from broker-dealer registration. Anna Pinedo of Morrison & Foerster blogs this about the FAQs:

Title II of the JOBS Act formalizes the guidance that has been provided by the SEC in various no-action letters relating to the types of activities that may be conducted by matchmaking sites without requiring broker-dealer registration. Section 201 notes that a matchmaking site will not be required to register as a broker-dealer solely by virtue of its private capital raising activities (which may include the use of general solicitation) provided that it complies with specified conditions.

The FAQs clarify that this provision does not require further rulemaking, but notes that a platform cannot permit an issuer to conduct a general solicitation in a Rule 506 offering until the SEC promulgates its final rules. The FAQs note that the exemption from broker-dealer registration in this section is applicable only when securities are offered and sold pursuant to Rule 506. The FAQs also address compensation and note that “Congress conditioned the exemption on a person and its associated persons not receiving any “compensation” in connection with the purchase or sale of such security.” Congress did not limit the condition to transaction-based compensation. The staff interprets the term “compensation” broadly, to include any direct or indirect economic benefit to the person or any of its associated persons. At the same time, we recognize that Congress expressly permitted co-investment in the securities offered on the platform or mechanism. We do not believe that profits associated with these investments would be impermissible compensation for purposes of Securities Act Section 4(b).” To this end, the FAQs note that a venture fund may operate a matchmaking site.

The FAQs also note that the availability of the exemption from broker-dealer registration should not be construed as suggesting that the entity is not otherwise a “broker” or a “dealer” and refers to its guidance on the types of activities typically associated with broker-dealer status. The Staff also notes that the JOBS Act exemption does not address state registration requirements.

Meanwhile, FINRA has released an interim form for crowdfunding portals as noted in Vanessa Schoenthaler’s blog

– Broc Romanek