SEC Provides Companies with More Flexible Framework to Conduct Concurrent Public and Private Offerings

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SEC Confirms Integration Guidance

The Securities and Exchange Commission (the “SEC”) staff recently published Compliance & Disclosure Interpretations (“C&DI”)1 in which it confirms interpretive guidance issued by the SEC in a 2007 proposing release (the “Release”)2 regarding the integration of concurrent public and private offerings. The guidance provides companies and their counsel with a more flexible framework to evaluate whether a private offering would be exempt from registration under the Securities Act while a registration statement is on file.3

The integration doctrine is designed to prevent an issuer from improperly avoiding registration by artificially dividing a single offering into multiple offerings to take advantage of exemptions under the Securities Act of 1933 (the “Securities Act”) that would not be available for the combined offering.4 The consequence of integrating the private offering with the public offering is that the private offering would need to be registered under the Securities Act.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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