On July 11, 2016, the Wall Street Journal reported that the Securities and 
Exchange Commission is investigating whether Tesla Motors Inc. violated the securities laws, apparently by not disclosing timely a fatal crash involving a Tesla Model S. Tesla’s handling of the incident from a disclosure standpoint raises interesting issues involving materiality and risk factors.
House Passes Watered Down “Fix Crowdfunding Act”
On July 5, the House of Representatives passed a watered down version of the Fix Crowdfunding Act (the “FCA”) that was initially introduced in March. The bill seeks to amend Title III of the JOBS Act by expressly permitting “crowdfunding vehicles” and broadening the SEC registration exclusion, but leaves out three important reforms that were
Title III Crowdfunding Goes Live Today with Much Potential, but Different Reality
Ever since the Federal securities laws were enacted in 1933, all offers and sales of securities in the United States had to either be registered with the SEC or satisfy an exemption from registration. The commonly used private offering exemption, however, prohibited any act of general solicitation. The JOBS Act of 2012 created a new
Fix Crowdfunding Act Would Cure Title III Crowdfunding Ills
Beginning on May 16, issuers for the first time will be able to offer and sell securities online to anyone, not just accredited investors, without
registering with the SEC. The potential here is breathtaking. Some $30 trillion dollars are said to be stashed away in long-term investment accounts of non-accredited investors; if only 1% of
2016 Trends in Convertible Note Deal Terms
Seed stage investment deals, i.e., those in a range of approximately $100,000 on the low end and around $1.3 million on the high end, are structured either as straight equity or as convertible loans. If straight equity, the company typically issues to the investor shares of preferred stock usually designated as Series Seed which includes
Protecting Management from a Liquidation Preference Overhang
“The Founder of a $50 Million Startup Just Sold His Company — And He Didn’t Make a Dime”. Such was the provocative headline of the Business Insider article last year reporting the sad tale of young entrepreneur Lane Becker and how he and his management team received none of the acquisition proceeds on
Working the Crowd: A Primer for Funding Portals
One of the key investor protections of Regulation Crowdfunding under JOBS Act Title III is the
requirement that offerings must be conducted exclusively through a single platform operated by a registered broker-dealer or a new type of SEC registrant, a funding portal. Although SEC registration for funding portals began January 29, 2016, intermediaries (funding portals
New Investor Exit Strategy Buried in Highway Bill
Buried in the recently enacted Highway Bill, officially the Fixing America’s 
Surface Transportation Act or FAST Act, is a new exemption for the resale of securities. The new resale exemption appears in the form of a new Section 4(a)(7) of the Securities Act of 1933 and essentially codifies the so-
called 4(a)(1-1/2) exemption. New
Regulation Crowdfunding Effective Date is May 16, 2016
It’s official: the new Regulation Crowdfunding rules will become effective on May 16, 2016. The SEC’s 
final rules release of October 31, 2015 provided that, with certain exceptions, the new rules will go into effect 180 days after they are published in the Federal Register. We just learned that the rules were published in
Trick or Treat? SEC Adopts Controversial Crowdfunding Rules
At an open meeting on October 30, 2015, the Securities and Exchange Commission by a three-to-one vote adopted final rules for equity crowdfunding under Section 4(a)(6) of the Securities Act of 1933, as mandated by Title III of the Jumpstart Our Business Startups Act. The final rules and forms are effective 180 days after publication