500 Startups, a Silicon Valley venture capital fund known for its startup incubator, said on Thursday it would generally solicit investments from the public for its third fund. Prior to the JOBS Act going into effect last year, 500’s attempt to generally solicit the public would have drawn the ire of the Securities & Exchange Commission. Now, the Act’s general solicitation provision allows private funds—500 …
California Private Funds Managing Public Retirement Plans Face New Disclosures
California Private Funds Managing Public Retirement Plans Face New Disclosures Reporting and disclosure requirements for managers of “alternative investment vehicles” (an “AIV”) in California just became more complex with Governor Jerry Brown’s signing of a new amendment to California law, specifically aimed at transparency for fees and expenses associated with investment by State and Local pension and retirement plans. The new provision, AB 2833, provides …
Newly Created “Capital Acquisition Broker” Rule Reduces Regulatory Burdens on Some Broker-Dealers
By Greg Caramenico and Lauren Mack On August 18th, the Securities and Exchange Commission (“SEC”) approved a Financial Industry Regulatory Authority Inc. (“FINRA”) rule that establishes less burdensome regulations for “Capital Acquisition Brokers” (“CABs”), which are a subclass of broker-dealers that engage only in limited activities. CABs can elect to be governed by the new rules by converting their current FINRA membership or by submitting a new …
Federal Courts Now Available for Trade Secret Misappropriation Claims
By Lauren Mack On May 11, 2016, President Obama publicly signed into law the Defend Trade Secrets Act (the “DTSA”), a long anticipated piece of legislation that creates a federal cause of action for trade secret misappropriation claims. Unlike claims of copyright, trademark, and patent infringement, trade secret misappropriation claims could not be brought by plaintiffs in federal court until now. What Are Trade Secrets? …
Debate Over Accredited Investor Definition Gaining Momentum
Discussions surrounding the accredited investor definition have crescendoed of late, demonstrating a sharp divide in opinion among regulators. On one side lies the North American Securities Administrators Association (“NASAA”), the lobbying group that represents the state securities administrators. The NASAA published a comment letter on the definition on May 25, 2016, evidencing a highly conservative approach.[1] The group relies on investor protection concerns in calling …
SEC Issues Notice of Intent to Raise Net Worth Threshold for Qualified Clients
By William Kelly and Simon Riveles On May 24, 2016, the Securities and Exchange Commission (“SEC”) published a notice of its intent to issue an order increasing the net worth threshold for “qualified clients,” as defined in Rule 205-3 under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Advisers Act generally prohibits SEC-registered investment advisers from charging any client a performance-based …
Which Regulation D Exemption is Suitable for Your Venture?
By Lauren Mack Companies seeking to raise capital – whether through selling equity, convertible notes, or any other security – in the United States must navigate a complex landscape of securities laws and regulations. They are subject not only to federal regulations, but also the laws of each state in which an investor (or soon-to-be investor) resides. The general rule under federal law is that …