Good Choice: Important Capital Formation Reforms in Financial CHOICE Act of 2017 Passed by House

By | New York Venture Hub | June 25, 2017
On June 8, 2017, the House of Representatives passed the Financial CHOICE Act of 2017 on a vote of 233-186. Congress loves acronyms, and here “CHOICE” stands for Creating Hope and Opportunity for Investors, Consumers and Financial Choice ActEntrepreneurs. Although the thrust of the bill is focused on repeal or modification of significant portions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and address a number of other financial regulations, it also includes a broad range of important provisions aimed at facilitating capital formation, including: Exemption of mergers and acquisitions intermediaries from the broker-dealer registration requirements of the Exchange Act; Expansion of the private resale exemption contained in Section 4(a)(7), which codified the so-called “Section 4(a)(1½)” exemption for resales of restricted securities by persons other than the issuer, by eliminating information requirements and permitting general solicitation, so long as sales are made through a platform available only to accredited investors; Exemption from the auditor attestation requirement under Section 404(b) of Sarbanes-Oxley of companies with average annual gross revenues of less than $50 million; Creation of SEC-registered venture exchanges, a new class of stock exchanges that can provide enhanced liquidity and capital access to smaller issuers; Exemption of small offerings that meet the following requirements: (i) investor has a pre-existing relationship with an officer, director or shareholder with 10 percent or more of the shares of the issuer; (ii) issuer reasonably believes there are no more than 35 purchasers of securities from the issuer that are sold during the 12-month period preceding the transaction; and (iii) aggregate amount of all securities sold by the issuer does not exceed $500,000 over a 12-month period; Exemption from the prohibition in Regulation D against general solicitation for pitch-type events organized by angel groups, venture forums, venture capital associations and trade associations; Streamlining of Form D filing requirements and procedures with the filing of a single notice of sales and prohibiting the SEC from requiring any additional materials; Exemption from the Investment Company Act for any VC fund with no more than $50 million in aggregate capital contributions and uncalled committed capital and having not more than 500 investors; Exempting Title III crowdfunding shareholders from the shareholder number trigger for Exchange Act registration; Amendment of Section 3(b)(2) of the Securities Act (the statutory basis for Regulation A+) to raise the amount of securities that may be offered and sold within a 12-month period from $50 million to $75 million; and Allowing all issuers, not just emerging growth companies, to submit confidential registration statements to the SEC for nonpublic review before an IPO, provided that the registration statement and all amendments are publicly filed not later than 15 days before the first road show. View Full Post
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The High Cost of Cannabis Prohibition

By | Canna Law Blog™ | June 25, 2017
Cannabis prohibition and stigmaOn July 6, 2016, Officer Jeronimo Yanez shot and killed Philando Castile during a traffic stop in Minnesota. On June 16, 2017, Officer Yanez was acquitted of all charges in the killing of Castile. In the days after the acquittal, authorities released investigative reports, including Officer Yanez’s interview with the Minnesota Bureau of Criminal Apprehension (BSA) where he stated the following:  I thought, I was gonna die. View Full Post
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Sports Broadcast Copyright in China: The Stranglehold of Originality

By | China Law Blog | June 25, 2017
China copyright lawI spoke in Beijing last week at a conference on legal protection of sports broadcasts, organized by the National Copyright Administration of China (NCAC) and the United States Patent and Trademark Office. Other speakers included Chinese judges, Chinese and American lawyers and academics, sports league and broadcaster general counsel, and American and European IP officials. View Full Post
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They Said It On Marijuana, Quotable Saturday, Part CLXIV

By | Canna Law Blog™ | June 24, 2017
Cannabis Last week on Quotable Saturday, we wrote about the utter insanity of Sessions’ May 1 letter to Congress opposing the Rohrabacher-Farr amendment. Sessions’ letter opposes the restrictions put in place by the amendment, claiming it would be unwise to “restrict the discretion of the Department to fund particular prosecutions,” meaning he wants free reign to go after medical marijuana businesses — including state compliant ones. View Full Post
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Importers Must Pay Customs Assessments in Canada to Perfect Appeal

Customs Building (XL)We were asked recently whether a non-resident importer could ignore paying a Canadian customs detailed adjustment statement (“DAS”) and continue to import goods into Canada (jsut thumb their noses up at the Canadian government). The answer provided is that a non-resident importer (and a Canadian resident importer) should not consider something so foolish.   View Full Post
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Dear Bankruptcy Asset Purchaser, Got Good Faith?

Section 363 of Title 11 of the United States Code (“Bankruptcy Code”) authorizes trustees (and Chapter 11 debtors-in-possession) to use, sell, or lease property of a debtor’s bankruptcy estate outside of the ordinary course of business upon bankruptcy court approval.  Some of the key benefits for purchasers are the ability to purchase assets free and clear of liens under Section 363(f) and obtain protections from adverse consequences of any appeal under Section 363(m). View Full Post
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