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June 15th, 2016
New Regulation A Rules Survive Legal Challenge
Here's some news for businesses considering capital raises via the Internet. On June 14th, 2016 the US Court of Appeals for the District of Columbia Circuit rejected petitions by the states of Montana and Massachusetts challenging pre-emption of state securities laws by the SEC regulations implementing Regulation A. The new Regulation A went into effect on June 19th, 2015.
Under the new Regulation A, issuers can raise up to $20 million (a Tier One Offering) or up to $50 million (a Tier Two Offering). The issuers must file offering materials with the Securities and Exchange Commission, and in a Tier One Offering, after having been cleared by the SEC, the offering materials must be filed with the securities regulatory agency of one state, appointed by the North American Securities Administrators Association. In a Tier Two Offering, there is a complete pre-emption of state securities laws for securities offered or sold to "qualified purchasers".
In a decision rejecting both petitions from Massachusetts and Montana, the Court ruled that the SEC regulations pre-empting state securities laws in a Regulation A offering are permitted by the Securities Act of 1933, and are not arbitrary or capricious.
It remains to be seen whether the states will appeal to the Supreme Court and if so, whether the Supreme Court will take the case, or whether this one potential threat to use the Internet to raise capital under the new Regulation A has been removed.
If you have questions about how to raise capital via the Internet, or about other media and entertainment finance matters, please contact Thomas D. Selz at (212) 826 5535 or tselz@fkks.com. To read our most recent legal alerts about the new regulations governing Internet-based crowdfunding, please see our alerts here and here.
Other Entertainment Law Alerts
New York City Reopens for Film and Television Production
On July 17, 2020 NYC Mayor Bill de Blasio announced that, with the City entering Phase Four of Reopening on Monday July 20th, 2020, film and television production in the City can restart again in earnest. Read more.
July 21 2020
Los Angeles County Authorizes Television, Film, and Music Production Resume on June 12, 2020 With Strict Regulations
On June 11, Los Angeles County approved a staged resumption of film and TV production beginning June 12, 2020. However, it comes with extensive regulations. Read more.
June 16 2020
California Will Permit Television, Film, and Music Production to Resume on June 12, 2020 Subject to County Public Health Approvals
As several production-heavy states announce the easing of stay-at-home orders and restrictions, the question of how to restart entertainment production in a safe manner has become paramount. Read more.
June 9 2020
