SEC adopts Regulation Crowdfunding. At its Open Meeting on October 30, 2015, the SEC approved a final rule to permit the offer and sale of securities through crowdfunding under Title III of the JOBS Act. The final rules will allow companies to raise up to US$1 million through crowdfunding during a 12-month period and place limitations on the amount investors may invest in these securities based upon income level. The final rules and forms will be effective 180 days after publication in the Federal Register, except that the forms enabling funding portals to register with the SEC will be effective on January 29, 2016. SEC press release. See also statements of Chair White and Commissioners Aguilar and Stein (supporting the final rules). Commissioner Piwowar objected to the rule’s complex compliance requirements that may dissuade small businesses from participating in crowdfunding and the income limitations placed on investors. Piwowar statement.(10/30/2015)
Canadian Regulators publish crowdfunding exemption and registration framework for funding portals. The OSC announced that the securities regulatory authorities in Manitoba, Ontario, Québec, New Brunswick and Nova Scotia (the participating jurisdictions) have published in final form “Multilateral Instrument 45-108 Crowdfunding,” which introduces a crowdfunding prospectus exemption for issuers as well as a registration framework for funding portals. The MI 45-108 crowdfunding regime will allow businesses to benefit from greater access to capital from a large number of investors online, through a funding portal operated by a registered dealer. Provided all necessary Ministerial approvals are obtained, MI 45-108 will come into force in the participating jurisdictions on January 25, 2016. The Financial and Consumer Affairs Authority of Saskatchewan (FCAA) will be republishing MI 45-108 for a 60-day comment period. (11/5/2015) OSC press release.
New crowdfunding platforms are coming to the US. CNBC reported that European crowdfunding company Seedrs will launch in the US after the Securities and Exchange Commission (SEC) adopted new rules that will permit start-ups to sell equity to anyone. Jeff Lynn, CEO of Seedrs, stated in a press release that “[w]e believe this heralds the emergence of equity crowdfunding as a vibrant form of finance in the United States—just as it has become in the UK and Europe—and Seedrs is perfectly positioned to take advantage of the sector’s growth.” (11/4/2015) CNBC story.
Regulators finalize offering memorandum exemption. The OSC announced that the securities regulatory authorities in Alberta, New Brunswick, Nova Scotia, Ontario, Québec and Saskatchewan (the participating jurisdictions) published Multilateral CSA Notice of Amendments to National Instrument 45-106 Prospectus Exemptions Relating to the Offering Memorandum Exemption. The amendments will introduce an offering memorandum prospectus exemption in Ontario and will modify the existing offering memorandum exemption in the participating jurisdictions to strengthen investor protection. As a result of the amendments, the offering memorandum exemption will now be available in all jurisdictions of Canada. Provided all necessary ministerial approvals are obtained, the final amendments will come into force in Ontario on January 13, 2016 and in Alberta, New Brunswick, Nova Scotia, Québec and Saskatchewan on April 30, 2016.
(10/29/2015) OSC press release.
OSC releases Proposed Whistleblower Program Policy for public comment.The Ontario Securities Commission (OSC) published Proposed OSC Policy 15-601 Whistleblower Program, which describes a whistleblower program that would encourage the reporting of serious securities-related misconduct in Ontario to the OSC. The program would be the first of its kind for securities regulators in Canada. Under the proposed policy, a whistleblower could be awarded up to C$5 million upon final resolution of an administrative matter. The whistleblower program is expected to increase the effectiveness of the OSC’s Enforcement Program by giving the OSC access to high quality information about matters such as insider trading, accounting and disclosure violations and registrant misconduct. OSC staff is seeking comment on the proposed policy by January 12, 2016. The OSC aims to have a whistleblower program in place in the spring of 2016. (10/28/2015) OSC press release.
JPMorgan considering ‘proxy access’ and adopts clawback disclosure policy.Reuters reported that JPMorgan Chase & Co.’s board will be considering a bylaw amendment that will make it easier for small groups of investors to nominate their own candidates for the board of directors. This change, which is known as “proxy access,” has become a popular reform at many companies this year. JPMorgan stated that this amendment will include a requirement that the shareholders would need to have owned at least three percent of the company for three years—a common threshold and an approach that the board requested. JPMorgan further stated that its board has also adopted a policy under which it would disclose whether it has recouped any incentive compensation from senior executives. (10/26/2015) JPMorgan.
Canadian securities regulators issue warning about messaging applications being used to entice investors. The securities regulatory authorities in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland, Nova Scotia, Ontario, Québec and Saskatchewan are warning the public about fraudulent stock promotions that use popular smartphone message apps like WhatsApp to generate investor interest. Like other “pump-and-dump” schemes that seek to create artificial interest in a particular stock, these promotions use spam to talk up the benefits of a company and convince people to invest. (10/20/2015) Warning about messaging apps.
President Obama’s SEC nominations, if confirmed by the Senate, would create the most diverse SEC ever. DealBook reported that President Obama’s recent nominations for the Securities and Exchange Commission, if confirmed by the Senate, would make the SEC the most diverse it has ever been. Four of the five commissioners would be women for the first time ever, while one of those women would be only the third African-American commissioner in SEC history.
(10/20/2015) Diverse SEC nominees.