by Justin Tollefsen | Apr 5, 2016 | Administrative US, Administrative WA, Attorneys, Blog, Business Law, Corporate Law DL, Entrepreneurship, Regulatory Compliance, SEC, Securities Law WA, Securities US, Tollefsen Law
At some point, nearly every regulatory client has asked me, in a tone of incredulity, why “such a little thing” mattered to a regulating agency. Often the client also asks why a government regulator focuses on the “little guy” when big business appears to skate through regulatory compliance with no issues. The second answer is far simpler but answering it first leads us to part of the answer for the first question. How Big Businesses Treat Regulatory Compliance Big businesses appear to skate through regulatory matters without issues, in a sense, because they are big. Being big, they hire regulatory compliance experts to eliminate issues and quickly correct any problems that do come up. They have support personnel to do the actual work. The proactively address most problems before they get to the point of administrative sanctions or lawsuits. This is not to say big businesses don’t have regulatory problems: many do. Some businesses simply don’t bother to comply and have problems as a result. But most big businesses place an emphasis on regulatory compliance. They recognize that compliance failure can be a business-ending proposition. They place a priority on regulatory compliance. Simply making regulatory errors can put a company under heightened scrutiny, causing more frequent examinations and other disruptive and costly consequences. A series of errors, or repeated errors, may also raise questions that lead to more serious investigations or prosecutions. Each situation drags at a company’s bottom line and pulls focus from the company’s mission and vision. As a result, most big businesses solve their regulatory issues quickly. They hire staff to address compliance. They include it...
by Justin Tollefsen | Sep 30, 2013 | Blog, Business Law, Entrepreneurship, Federal Law, Securities Law WA, Securities US
As readers of this and other startup-focused blogs will be aware, exactly one week ago today general solicitation of securities offerings to accredited investors became legal for the first time in 80 years. Prior to the 23rd of September, coverage of this upcoming shift was divided with some predicting major alterations to the landscape, others predicting hardly any change at all, and yet others delaying judgment, at least until some additional proposed rules are finalized. Reading the Tea Leaves What can we learn from the first week’s tea leaves regarding the initial reaction to general solicitation? Some notable actors were off to the races, with folks like AngelList and WeFunder immediately jumping in and offering solutions that take advantage of the broad exposure offered by general solicitation (while recognizing the need to still comply with accredited investor requirements). Leading the charge were Second Market and WeFunder. The latter has taken perhaps the most proactive stance on general solicitation, even offering to do some securities work on behalf of companies (using generic forms). These companies seem to be betting that the current window between the enactment of the rules adopted in July allowing for general solicitation and the pending adoption of any of the proposed rules will give them a significant head start on their competitors. They are also betting that any new rules won’t change things significantly (the best case for them), or at least won’t be applied retroactively. On the opposite end, FundersClub has taken a cautious “wait-and-see” approach. CEO Alex Mittal has made it clear that the VCs, angel investors, law firms and others that he has...
by Justin Tollefsen | Sep 23, 2013 | Blog, Business Law, Entrepreneurship, Federal Law, Securities Law WA, Securities US
As has been continuously reported in the media, and on fine law blogs, today marks the end of the 80 year ban on general solicitation (public advertisement) for securities sales. This means that for the first time since the Securities Act of 1933 was enacted, companies will be able to go out and solicit groups of accredited investors to invest in their startups, provided that they: Check a box on their form D indicating that they have generally solicited; Take additional steps to verify that their investors are in fact accredited (one page questionnaire no longer good enough); and Ensure that they do not accept any funds from non-accredited investors. #1 is self explanatory. #2 requires a bit of attention, because in the past is was sufficient to have an investor fill out a basic questionnaire verifying that they comply with the definition of “accredited”, as defined in Rule 501 of Regulation D. Now, however, those generally soliciting investments must take “reasonable steps” to ensure that the investors are indeed accredited, and must keep proof of having done so. This means that you will need to ask for personal financial documentation, such as copies of form W-2 or 1040, bank statements from past three months, and brokerage statements from your potential seed or Angel investors. Many will scoff at this intrusive requirement. #3 is also important. While a “regular” Rule 506 offering still allows for up to 35 non-accredited investors, if you check the box indicating that you’ve generally solicited, you may not sell ANY shares to non-accredited investors. In addition, the SEC took the confusing step of issuing...
by Timothy David Knowles | Apr 24, 2013 | Blog, Business Law, Entrepreneurship, Immigration
Mr. Knowles is an EB-5 immigration attorney who works with Tollefsen Law from time to time on EB-5 projects. He can be reached at (360) 933-1612. Contact Tollefsen Law regarding potential EB-5 project What is EB-5 Capital? The Immigration Act of 1990, as amended, permits foreign nationals to earn a green card (permanent resident visa) for themselves and their immediate family by investing a minimum of $500,000 in a qualifying business enterprise that will create 10 new U.S. jobs or save 10 existing jobs. Regulations permit the State Department to issue 10,000 EB-5 visas each year in this category. Investors approved by USCIS (US Citizenship and Immigration Services) receive a conditional green card, that requires them to make a subsequent filing within 21 – 24 months of landing in the U.S. The filing must prove that the Investor sustained the investment, and that the investment created the 10 jobs required. Regional Center is an investment promotion entity (public, private or non-profit) approved by USCIS to offer qualifying investment opportunities in a defined geographic area, in specific industrial/commercial categories, that comply with the EB-5 program. There are now over 125 approved regional centers in the U.S. In FY 2009-10, 1274 EB-5 petitions were approved by USCIS generating $700 million in project investment. It is projected that as much as $1 billion in investment dollars will flow into the U.S. through this program in FY 2010-11. Jobs may be created directly (actual employees employed by the recipient of the invested capital) OR indirectly (the direct, indirect and induced employment impact as measured by an econometric study) if invested through a regional...
