On August 29, 2012 the SEC released a set of proposed rules that have been reviewed and commented on by just about everyone with an interest in securities laws; over 220 comment letters. Then everyone waited and waited and is still….waiting.

On April 17, 2013 SEC Commissioner Elise Walter told the House Committee on Financial Services that concern about Fraud is delaying the release of the rules to allow general advertising for certain securities.  She stated that the concern over fraudulent securities offerings made the SEC take a closer look at the proposed rules to determine how to better protect the investors.

Ms. Walter said the SEC would need additional resources to enforce the new rules, but that the budget sequestration would impact the SEC’s hiring.

So, what should you expect? More waiting. I would not suggest attempting to generally solicit in anticipation of the final rules being released, but maybe in the meantime your business could consider using some of the following crowdfunding like sites:

• Kickstarter
• Microventures

Also see wikipedia for  a robust list of crowdfunding sites.

Author: Jennifer Trowbridge, Esq. Stoecklein Law Group, LLP

Reblogged from RocketNews24:

Tadashi Yanai, chairman and director of Fast Retailing and the main force behind the expansion of Japanese clothes retailer UNIQLO, has recently made public his intentions to introduce a worldwide universal wage system for shop managers and high ranking employees. This would effectively mean that regardless of the country in which a worker is employed, while working for UNIQLO they would receive the same amount of pay.

Read more… 167 more words

Reblogged from VentureBeat:

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Upstart, the startup that can help recent graduates step off the treadmill of a corporate career, just closed its first round of funding.

The San Francisco-based company, which has been described as a "Kickstarter for people," secured $5.9 million in investment from a roster of high-profile investors, including IronPort cofounder Scott Bannister, Salesforce CEO Marc Benioff, and Google executive chairman Eric Schmidt.

Read more… 647 more words

Reblogged from Small Business Compliance Services:

The three judge panel stated that the SEC employees are covered by the Discretionary Function Exception of The Federal Torts Claims Act (FTCA).  The FTCA bars claims that are based on performance, or failure to perform a discretionary function or duty of federal government or a federal agency by the employee; even if there is an abuse of discretion.  In sum, a personal injury cause of action cannot be filed under the FTCA if the employee’s negligence arises from a discretionary function or the execution of a statute or regulation.

Apparently, the SEC employees who used their individual and group discretion with regard to their handling of  the warnings, tips and complaints about Madoff are protected. If their discretion was to simply throw the tips in the trash and look the other way, they may be entitled to do so. They would not be liable for the losses suffered by the defrauded Madoff clients.

The judges said they have “sympathy” for the Plaintiffs, and they called the SEC’s failure to uncover Madoff’s scheme “regrettable,” but “Congress’ intent to shield regulatory agencies’ discretionary use of specific investigative powers…is fatal to the Plaintiff’s claims.”

Madoff pleaded guilty in 2009 to orchestrating an enormous fraud that cost his clients at least $17 billion. He is currently serving what amounts to a life sentence in federal prison in North Carolina.

How do you feel about the Court’s decision?

Author: Jennifer Trowbridge, Stoecklein Law Group, LLP

*Photo Credit: US Department of Justice, 2009

Reblogged from VentureBeat:

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Starting a company is a possible at any age.

To prove that innovation isn't just a young man's game, we gathered together a group of founders from successful companies like Box, Hubspot, and Poshmark.

These entrepreneurs say that it's time we shattered Silicon Valley's age bias. Many venture capitalists have openly stated their preference for funding bright-eyed, youthful founders.

Read more… 1,787 more words

The SEC investigated whether Netflix, Inc. and its CEO, Reed Hastings violated Securities laws when Hastings used his personal Facebook page to announce that Netflix had streamed 1 billion hours of content in the month of June 2012. Netflix did not file a Form 8-K with the SEC, issue a press release or otherwise publicly announce this information. Neither Netflix or Hastings had previously used a social media outlet to make an announcement.

So, what was the problem? Well, the SEC was unsure as to whether 1) that statement violated Regulation FD, and 2) it complied with the Commission’s 2008 Guidance on the Use of Company Web Sites. Since the 2008 disclosure was focused on the use of company websites, the Commission was unsure of how the use of social media sites differed.

Ultimately, after investigating, the SEC decided not to pursue an enforcement action, but rather wants to take advantage of this opportunity to clarify that Regulation FD and the SEC’s 2008 guidelines and framework apply to social media. The SEC stresses that a public company should tread lightly. Before posting on Facebook, Twitter or other social media outlet the CEO, (with the assistance of securities counsel) needs to consider whether Reg FD applies to  such disclosure. If so, then determine:

• Is any potential recipient of information of the social media post a shareholder, securities professional or other type of person enumerated in Reg FD?
• Is the information non-public  and material?
• If so, then the information must either be simultaneously filed in a Form 8-K or disclosed in a manner “reasonably designed to provide broad, non-exclusionary distribution of the information to the public.”

The key is to make sure that the Company takes proper steps to ensure that the public is on notice  as to each outlet for material, nonpublic information about the issuer and has access to those outlets is available to those who want it.

If your Company  uses a Social Media site you should clarify usage guidelines for employees, and take steps to make the public aware of each specific channel through which you expect to disseminate material, nonpublic information.

Author: Jennifer Trowbridge, Stoecklein Law Group, LLP

A severance provision in an employment agreement, or a separate severance contract provides for specified compensation in the event the executive is involuntarily terminated (other than for “cause”).  It can be a golden parachute or a non-golden parachute contract as described below:

Golden Parachute
A Golden Parachute provides a generous severance package to top executives in the event of a change in control transaction; merger, acquisition, etc.  It can have a single trigger, allowing the executive to receive the severance package when the change in control occurs, even if the executive retains his/her position; or a double trigger where the severance is payable upon change of control and loss of employment.

A typical Golden Parachute payment may include a value of one year’s base salary, an award equal to a previous incentive compensation, and/or an amount equal to the number of vested and un-vested shares in a long-term stock option award multiplied by the “spread” calculated by subtracting the stock price under the terms of merger from the option exercise price.

Golden Parachutes are regulated by Code Section 280g, and have complicated requirements, so you should consult an attorney prior to negotiating.

Since Golden Parachutes have become  controversial and as evidenced by the recent SEC regulations regarding say-on-pay and the shareholder vote required  on Golden Parachutes, their use will likely decline. However, they do still have some advantages such as helping to retain key executives during a restructuring and some argue they help executives remain objective when considering a merger or acquisition that could lead to their termination.

However, what if you are not the Heinz CEO, can you get in on this “walk away” package?Maybe.

Silver ParachuteGolden Parachutes are mostly reserved for the highest officers of the corporation. A Silver Parachute however is a severance agreement that persons in management positions can negotiate for.  It has the similar single and double trigger options as the Golden Parachute, but with less generous benefits.

Tin ParachuteAs you can guess, the tin Parachute is the severance package for non-management positions and is typically less generous than those above.

Author: Jennifer Trowbridge, Stoecklein Law Group, LLP.

Photo Credit to http://www.suitsbysuits.com/Why_Golden_Parachutes

Reblogged from Streams of Conscience:

Solar Sister is a network of women selling solar lighting to poor communities.  The women make a commission on each sale, with most of them spending the extra income on education for their children.

Using an Avon-style women’s distribution system, Solar Sister trains, recruits and supports female entrepreneurs in East Africa to sell affordable solar lighting and other green products such as solar lamps and mobile phone chargers.  

Read more… 480 more words

Reblogged from luisylin:

How are you going about making money? What if you could make money with some of your craziest ideas? Here are five of my favorite off-the-wall businesses:

Game Truck – In 2006, Scott Novis, fed up with the experience had at his son’s 4th birthday party in a pizza arcade, began a business called Game Truck to help ensure better parties for young people.

Read more… 776 more words