Starting on March 16, 2009, companies selling securities under Regulation D must electronically file Form D with the Securities and Exchange Commission ("SEC").

Updated Form D Information Requirements

Form D is a notification filed with the SEC by companies issuing securities in reliance on the exemption from registration under Regulation D or Section 4(6) of the Securities Act of 1933. Issuers must file Form D 15 calendar days after the date of the first sale of securities in the offering. Issuers that have decided to proceed with an offering may file their Form D with the SEC prior to making their first sale of securities. The SEC revised the content of Form D as of September 15, 2008. Between September 15, 2008 and March 15, 2009, issuers were allowed to use the newly revised version or the prior version of Form D. The newly revised Form D contains information about the issuer, the offering and the exemption claimed and has been reorganized into 16 numbered categories.

The SEC's changes to Form D also clarify when an amendment to a previously filed Form D is necessary. Issuers must file an amended Form D under the following circumstances:

• to correct a material mistake of fact or error in the previously filed notice, as soon as practicable after discovery of the mistake or error;
  
• subject to numerous exceptions, to reflect a change in the information provided in the previously filed notice, as soon as practicable after the change; and
  
• annually, on or before the first anniversary of the most recent previously filed notice, if the offering is continuing at that time.

Regardless of the reason for the amendment, the issuer must provide current information in response to all sections of Form D.

Electronic Filing

As of March 16, 2009, the SEC's transition period for Form D will end and issuers will be subject to mandatory electronic filing of the newly revised Form D. Issuers filing Form D electronically with the SEC must become EDGAR filers by obtaining a unique Central Index Key ("CIK") number and related access codes. EDGAR stands for Electronic Data Gathering, Analysis and Retrieval system and is the SEC's online filing system. Once an issuer has its CIK number and EDGAR access codes, it can log on to the EDGAR system and file Form D electronically.

Increased Public Access

Electronic filing of Form D will facilitate greater public access to information about private offerings. Prospective investors will be able to access the EDGAR Company Search to determine whether a particular company has filed a Form D. Investors can also request a copy of any Form D from the SEC.

Some states also require filing of Form D notices and amendments, along with filing fees. For information on state filing requirements, visit www.NASAA.org.

A copy of the SEC's final rule release regarding the revisions to Form D and electronic filing (Release No. 33-8891) is available at www.sec.gov. This Securities Law Update was prepared by Jessica Benford. If you have any questions or would like to obtain additional information about SEC regulatory developments, please contact Phillip Guttilla, James Brophy, Tara Pauls or Jessica Benford.

Background

The US Securities Exchange Commission ("SEC") issued an interpretive release[1] on August 1, 2008 (the "Release") that provides guidance as to how company web sites may be used to disclose information to investors in compliance with federal securities laws.  The release focuses on a few specific areas of securities regulation, including Regulation Fair Disclosure ("Reg FD") and the antifraud provisions of Rule 10b-5 and Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act")

SECURITIES LAW UPDATE:

SEC Adopts Significant Revisions Rules 144 and 145

Background

            Under Section 4(1) of the Securities Act of 1933 (the "Securities Act"), the securities registration requirements are not applicable to transactions by any person other than an issuer, underwriter, or dealer.[1]  The Securities Act defines an "underwriter" as "any person who has purchased from an issuer with a view to, or sells for an issuer in connection with, the distribution of any security, or participates or has direct or indirect participation in any such undertaking . . . ."[2]  Rule 144 creates a safe harbor for persons reselling restricted securities and allows them to avoid being considered underwriters if the conditions of the rule are satisfied.  This Securities Law Update highlights some of the major changes to Rule 144.

SEC REVISES FORMS D, S-3 AND F-3

The Securities and Exchange Commission ("SEC") voted to approve changes to Form D, Notice of Sale of Securities Pursuant to Regulation D, Section 4(6), and/or Uniform Limited Offering Exemption, on December 11, 2007. The adopted revisions will require electronic filing of Form D. Additionally, Form D's content has been revised. Form D will be modified to include:

• Requiring filers to identify all issuers in a multiple-issuer offering;

• Deleting the current requirement to identify as "related persons" owners of 10 percent or more of a class of equity securities;

• Replacing the current requirement to provide a business description with a requirement to provide industry group information from a pre-established list;

• Requiring revenue range information for operating companies and net asset value information for hedge funds (subject to an option to decline to disclose);

• Requiring reporting the date of first sale;

• Specifying that material mistakes of fact or errors in a previously filed Form D require an amendment and when changes in a previously filed Form D or the passage of time require amendments;

• Requiring that amendments contain current information in response to all information requirements;

• Revising the minimum investment amount disclosure requirement to specify that it relates to outside investors only;

• Replacing the current requirement to disclose information on a wide variety of expense and use of proceeds items with a requirement to disclose expenses only as to amounts paid for sales commissions and, separately stated, finders' fees and disclose use of proceeds only as to the amount of gross proceeds used or proposed to be used for payments to related persons; and

• Permitting a limited amount of free writing to the extent necessary to clarify responses.

Permissive electronic filing will begin on September 15, 2008 and mandatory electronic filing will begin on March 16, 2009. Revised Form D will become effective on September 15, 2008. The revisions to and use of electronic filing for Form D are intended to reduce filing burdens and thus, improve capital formation, particularly for smaller issuers.

The SEC also adopted amendments to the eligibility requirements for Form S-3 and its counterpart for foreign issuers, Form F-3. Companies that do not meet the current public float requirement will become eligible to use Forms S-3 and F-3 to register primary offerings of their securities. The SEC estimates that approximately 1,400 smaller reporting companies will become eligible under the new eligibility requirements. Smaller reporting companies, with less than $75 million in public float, will be limited to selling not more than one-third of their public float in primary offerings in any period of 12 calendar months.

Smaller reporting companies, with less than $75 million in public float will be eligible to use Forms S-3 and F-3 so long as they meet all the other requirements of the respective form, are not shell companies and have not been a shell company for at least 12 calendar months prior to the filing of the registration statement, have a class of common equity securities listed and registered on a national securities exchange and do not exceed the one-third of public float limitation.