On July 25, 2017, the SEC’s Division of Enforcement issued a Report of Investigation 
(the “Report”) that concluded that the tokens issued in an initial coin offering (“ICO”) by a decentralized autonomous organization called “The DAO” were “securities” and that the ICO itself should either have been registered with the SEC under the Securities Act
Do Private Company M&A Intermediaries Need to Register with the SEC as Broker-Dealers?
Since 2014, many private company mergers and acquisitions intermediaries have 
chosen not to register as broker-dealers. That’s because a 2014 SEC no-action letter took the position that intermediaries that limited their activities to representing private companies in M&A deals were not required to register with the SEC as broker-dealers. But as a no-action letter, the
Good Choice: Important Capital Formation Reforms in Financial CHOICE Act of 2017 Passed by House
On June 8, 2017, the House of Representatives passed the Financial CHOICE Act of 2017 on a vote of 233-186. Congress loves acronyms, and here “CHOICE” stands for Creating Hope and Opportunity for Investors, Consumers and 
Entrepreneurs. Although the thrust of the bill is focused on repeal or modification of significant portions of the Dodd-Frank
Irredeemable: Delaware Case Will Make Redemption Rights Tougher to Enforce
Venture capital funds routinely negotiate for a right of redemption – the right to require the company to buy out their shares after a certain period of time if an exit has not occurred – as a key element of their exit strategy. But according to a recent case in Delaware, the VCs and the
Sellout: Why Control is Key in the Sale of VC-Backed Companies
Every founder of a growth startup dreams of a big, successful exit — a sale of the company for millions of dollars. But that dream could be shattered if the investors are able to cause the company to be sold prematurely with proceeds only equal to or barely exceeding the investors’ liquidation preferences, leaving little
The JOBS Act at Five: Congressional Hearing Highlights Need for Further Reform
On March 22, the Subcommittee on Capital Markets, Securities, and Investment of the Financial Services Committee conducted a hearing entitled “The JOBS Act at Five: Examining Its Impact and Ensuring the Competitiveness of the U.S. Capital Markets”, focusing on the impact of the JOBS Act on the U.S. capital markets and its effect on capital
The Snap IPO: Speculation Without (Board) Representation
The just completed IPO of Snap Inc. has received enormous buzz and plenty of press coverage, mostly about its eye-popping valuation and offering proceeds, the big winners among the founders and early investors and the millennials who bought shares. But not nearly as much attention has been given to Snap’s tri-class capital structure
Valuation Disconnect Leads to 2016 IPO Drought
2016 turned out to be a terrible year for IPOs, both in terms of number of deals and aggregate proceeds.
According to Renaissance Capital’s U.S. IPO Market 2016 Annual Review, only 105 companies went public on U.S. exchanges in 2016, raising only $19 billion in aggregate proceeds. The deal count of 105 IPOs was
How Corporate Venture Capital Differs
Earlier this year, Union Square Ventures Managing Partner Fred Wilson famously referred to corporate VCs as “The Devil”, when he asserted that companies should not be investing in other companies, that they should be buying other companies but not taking minority positions in them, that the “access” rationale for corporate venture is a reason
SEC Adopts Rules to Facilitate Intrastate and Regional Offerings
On October 26, 2016, the Securities and Exchange Commission adopted final rules intended to make intrastate and regional offerings more viable pathways for smaller raises. The new rules (i) amend Rule 147 to simplify the “doing business” 
standard, (ii) create a new intrastate exemption, Rule 147A, which allows use of the internet and other forms