Three Experts, Three Answers: How to Work Through Conflicting Reg A+ Advice
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When three experts give you three different answers on a Regulation A+ question, there is more work to do. I dig deeper rather than treating any one answer as the verdict. Even advice that every advisor agrees on can fall behind as SEC practice evolves.
Founders and CFOs assembling an advisory team can run into conflicting guidance from securities attorneys. This article describes how I think about that situation. It is a decision process, not a legal conclusion.
What Conflicting Reg A+ Legal Advice Tells You
When you speak to three experts and you get three different answers, you have more work to do. In my experience, that happens often with securities attorneys. I have been in many situations where the advice I received was contradictory, and I have had to dig deeper.
I treat that kind of disagreement as information that the question needs more work. I do not treat it as a verdict. For context, Reg D, Reg A+, and Reg S each have nuances, and in my experience Reg A+ has the most.
Weighing conflicting advice on your Reg A+ raise? Talk to an MSC strategist.
A Case Where Long-Standing Advice Changed
Companies sometimes run a Reg D offering alongside a Reg A+ offering, or use bonus shares, to give large investors advantageous terms so that institutional investors will participate.
For many years, the best securities attorneys told me the same thing whenever a company wanted to run both offerings at the same time. If the company is selling the same security in both, they said, it should have the same share price. The SEC would not allow even the smallest share price differential
Then I saw an instance where a company ran both Reg D and Reg A+ offerings with deep discounts available for Reg D investors that invested huge amounts of capital. In the Reg A+ offering, discounts are delivered via bonus shares, which work as an effective discount - the max discount the SEC allows by this method is 20%. An institutional investor putting in millions of dollars demands a much lower share price than an investor putting in $300.
SEC practice has evolved to allow companies to follow that model of discounting for institutional investors via the Reg D. This is now common practice. Not everyone knows this.
What Evolving SEC Practice Means for Advice
The advice in that case came from the best securities attorneys, and it still fell out of step with SEC practice. SEC practices evolve.
Preguntas frecuentes
What does it mean when securities attorneys give different answers on Reg A+?
When I get conflicting answers from securities attorneys, I treat it as a sign that there is more work to do, and I dig deeper before making a recommendation to my customer CEO.
Why can Reg A+ advice conflict?
SEC practices can evolve, and there have been situations where long-standing advice no longer matched up-to-date practice. Some attorneys were up to date, some were not.
¿Preguntas?
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Sobre la autora
Fundador y CEO de Manhattan Street Capital
Rod Turner es el fundador y director ejecutivo de Manhattan Street Capital, donde creó la plataforma que utilizan las empresas en fase de crecimiento para realizar rondas de financiación bajo la Regulación A+ en línea.
Anteriormente, ayudó a fundar Symantec/Norton, Ashton Tate, MicroPort y Knowledge Adventure, y creó la firma de capital de riesgo Irvine Ventures, invirtiendo en empresas como Bloom, Amyris, Ask Jeeves y eASIC.
Los comentarios de esta página reflejan las observaciones de Rod sobre lo que suele funcionar en el marketing online para la captación de capital. No constituyen asesoramiento legal, contable ni de inversión.
Manhattan Street Capital no es un bufete de abogados, un servicio de valoración, un suscriptor, un intermediario de bolsa ni una plataforma de financiación colectiva (crowdfunding) bajo el Título III, y no realiza ninguna actividad que requiera dicho registro. Manhattan Street Capital no ofrece asesoramiento de inversión ni estructura transacciones. No interprete ningún comentario del personal de Manhattan Street Capital como un sustituto del asesoramiento de profesionales cualificados en estas áreas. Cuando Rod Turner ofrece comentarios, estos se basan en su experiencia sobre qué funciona y qué no desde una perspectiva de marketing en ofertas online; no les dice a los lectores qué hacer, sino qué es lo más probable que se comercialice online de forma rentable. Todas las decisiones sobre los términos de cualquier oferta las toman las empresas que la realizan.
