Regulation A

Lender’s $4.5 Million of Promissory Notes Were Unregistered Securities

May 29, 2018 | Elizabeth Dalziel

A case involving real estate lending illustrates the perils of failing to comply with the securities laws. Last fall the Securities and Exchange Commission filed a complaint against Paul Z. Singer, a Philadelphia-based lender, and his company, Singer Financial Corp. (“SFC”), alleging that from October 2012 to July 2015, Singer, “by and through SFC, raised $4.5 million from at least 70 investors through an illegal and unregistered offering of securities in the form of promissory notes.”

This is not the first time Singer and SFC have been alleged to have sold unregistered securities. The Pennsylvania Securities Commission imposed penalties against SFC in 1997 and Singer and SFC in 2007 for violations of Pennsylvania’s securities laws pertaining to the unregistered offer and sale of securities. Also, the New Jersey Bureau of Securities imposed a $5,000 fine against SFC in 2010 for selling unregistered securities. Continue reading ›

New Amendments to Regulation A

August 14, 2015 | Bryan Gort

On June 19, 2015, new amendments to Regulation A took effect which should increase capital raising options of some smaller businesses. Formerly, the Regulation A exemption was limited to $5 million. The new amendments provide an avenue for businesses to raise up to $50 million of capital. As a result of the new amendments, Regulation A is now divided into two tiers, “Tier 1” and “Tier 2.”

In Tier 1 offerings, companies can raise up to $20 million over a one year period, with not more than $6 million in offers by selling security-holders that are affiliates of the issuer. Under Tier 1, the offering must pass state securities regulation in any state where investors are located.

In Tier 2 offerings, companies can raise up to $50 million over a one year period, with not more than $15 million in offers by selling security-holders that are affiliates of the issuer. A Tier 2 offering has the significant advantage of being exempt from many state registration requirements.
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SEC Has Additional Rulemaking Deadlines with Passage of JOBS Act

April 12, 2012 | Steve Parker

With the passage of the Jumpstart Our Business Startups Act (JOBS Act), the Securities and Exchange Commission (SEC) will be required to create a number of new rules, in addition to the rules already required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

The first deadline that the SEC faces under the JOBS Act is adopting rules eliminating the ban on general solicitation of certain private offerings. It will have 90 days to revise Rule 506 of Regulation D to allow those securities to be sold using general solicitation or advertising when all of the purchasers of the securities are “accredited investors.”

The JOBS Act also created a new crowdfunding exemption to registration. The SEC will have 270 days to adopt the rules and regulations effectuating this exemption, as the SEC determines to be necessary or appropriate for the protection of investors. The Financial Industry Regulatory Authority may also adopt rules regulating “funding portals” for issuers.
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