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Gregory K. Bader serves as chairman of the firm’s Banking and Financial Services practice and is a partner in the Corporate Practice Group. He focuses his practice on mergers and acquisitions, regulatory compliance, securities offerings, and advising companies and their management as they make critical business decisions.

The SEC Division of Corporate Finance recently issued guidance to smaller financial institutions concerning Management’s Discussion and Analysis and accounting policy disclosures. The guidance can be found in CF Disclosure Guidance: Topic No. 5, dated April 20, 2012 and amounts to rules to follow for future filings that should not be ignored.

The Division

Earlier this month, the S.E.C. changed its long standing practice of allowing defendants of securities violations to “neither admit nor deny” criminal wrongdoing.  This change is effectively the S.E.C.’s response to critics that say that the agency should not let criminal defendants simply pay a fine and avoid an admission of guilty.  The new policy

If the U.S. House of Representatives has its way, big changes are on the horizon for private offerings.  In an effort to enhance the ability of small businesses to raise capital, the House has now passed four bills that reduce some of the restrictions.  The bills are as follows:

1)  Entrepreneurial Access to Capital Act (HR 2930) – This bill would allow businesses to accept and pool donations of up to $1 million (or $2 million in some instances) without requiring SEC registration.  This concept is known as crowdfunding, which involves the pooling of small contributions in an effort to help others attain a specific goal. If this bill were to become law, it would preempt state law, would permit access to capital sources that previously were untapped, and would prevent the new shareholders from being counted toward the SEC’s 500 shareholder limit for non-public companies.

2)  The Access to Capital for Job Creators Act (HR 2940) – This bill would remove the general solicitation and advertising ban from SEC Rule 506 under Regulation D.  This change would permit small businesses to solicit investments from accredited investors throughout the U.S. and globally.  Like the crowd funding bill, HR 2940 would provide greater access to capital sources.  It would also modernize the way Regulation D offerings are conducted by allowing businesses to directly advertise to accredited investors.

3)  HR 1965 – This bill with no name would increase the number of shareholders bank holding companies and banks may have before requiring SEC registration.  Currently, companies are required to go public if they have 500 or more shareholders and have $10 million or more in assets.  The bill would allow community bank holding companies to have up to 2,000 investors before requiring registration.  As such, community banks would have greater access to capital without requiring added SEC regulation.
Continue Reading House Votes to Make Capital Raising Easier