Reg a have you been a bad boy

www.TheSecuritiesAttorneys.com

Reg A +Have You Been a

Bad Boy?


The SEC amended the “bad actor” provisions of

Regulation A to be in line with

Rule 506 of Regulation D

You cannot use Reg

A if the issuer or other “covered

persons” have been convicted of, or are subject to court or

administrative sanctions, for fraud or other violations

Disqualifying events:

1. Criminal convictions

2. Court injunctions and restraining

orders

3. Final orders of certain regulators

4. SEC disciplinary orders

5. Certain SEC cease-and-desist

orders

6. Suspension or expulsion from

SRO membership or association with an SRO

member

SRO = Self-Regulatory

Organization

such as the stock exchanges and

FINRA

7. Stop orders and

orders suspending the Regulation A

exemption

8. U.S. Postal Service false representation

orders

An issuer would not lose the Regulation A exemption if it

can show that it did not know,

and in the exercise of reasonable care could not

have known, of the existence of a disqualification

The covered persons include managing members of limited liability

companies; compensated solicitors of investors; underwriters; executive

officers and other officers participating in the offering;


and beneficial owners of 20% or more of the issuer’s outstanding voting equity securities, calculated on the

basis of voting power.


Consistent with the bad actor disqualification rules under Rule

506(d), the final rules also include two new disqualification triggers not

previously present in Regulation A:


(1) final orders and bars of certain state and other federal regulators, and (2) SEC

cease-and-desist orders relating to violations of scienter-based anti-fraud

provisions of the federal securities laws or Section 5 of the Securities Act

The order must bar

the covered person at the time

of filing of the offering

statement

Disqualified issuers can

request a waiver of the

disqualification from the SEC


Want to know more? – email me at John.Lux@ Securities-Law.info

(240) 200-4529

John E. Lux was in

the top 5% of authors on

Slideshare in 2014 and has been

quoted by Bloomberg as an expert on reverse

mergers


This is part of a series on Regulation A, so be sure to subscribe here and to learn

more, go to www. TheSecuritiesAttorneys.com

and get a free copy of our book

“How to Go Public”

Disclaimer

This is not legal or investment advice of any kind

Seek competent advice from qualified attorneys and investment bankers

Your situation may vary

The more you know about finance and business, the more you can profit

Business

Reg a have you been a bad boy