Given recent market trends, many private companies have seen valuations decline significantly, resulting in an increasing number of service providers holding “underwater” or “out of the money” stock options. As a...more
The Securities and Exchange Commission (the “SEC”) recently voted to propose temporary rules to permit companies to provide equity compensation to certain workers known as “gig” or “platform” workers....more
Some time ago, in 2018, the Securities and Exchange Commission had issued a concept release requesting public comment on possible amendments to Rule 701 and Form S-8. The concept release followed after the SEC Staff had...more
The Securities and Exchange Commission released for comment proposed rules that would apply on a temporary basis to allow for broader reliance on Rule 701 and Form S-8 for stock-based compensation related awards to gig or...more
This week we’re changing the station on the Benefits Dial to remind private companies who are granting securities to their employees of the importance of complying with Rule 701. Rule 701 of the Securities Act of 1933...more
In the past weeks, many companies, both public and private, have seen their stock prices and values decline because of the economic disruption caused by COVID-19. As a result, outstanding stock options may no longer provide...more
Stock options, in large part, make some of the biggest public tech companies tick; a means of attracting top talent with the promise of big payouts down the road. In recent years, the gig economy has dominated the landscape...more
In a recent paper titled “Unicorn Stock Options – Golden Goose or Trojan Horse?” Anat Alon-Beck analyzes the issues arising in connection with stock-based compensation awarded to employees of unicorns given the trend toward...more
The Economic Growth, Regulatory Relief, and Consumer Protection Act (the "Act") hit national news channels in late May 2018 due to its sweeping relief from provisions of the 2010 Dodd-Frank Wall Street Reform and Consumer...more
The SEC recently amended Securities Act Rule 701, which provides a registration exemption for securities sold by non-reporting companies to their employees and other covered persons under compensatory arrangements. The...more
On July 18, 2018, the Securities and Exchange Commission (SEC) issued a concept release soliciting public comment on ways to modernize Rule 701 and Form S-8 of the Securities Act of 1933 to account for recent developments...more
Last week, the U.S. Securities and Exchange Commission (the “SEC”) (i) approved the increase of the threshold at which private companies must provide financial disclosures in private company compensatory Rule 701 offerings...more
The Congressionally-mandated amendment aims to ease the disclosure burdens of private companies that grant compensatory stock to employees. Grants of securities to employees, including stock options, restricted stock and...more
Increased 701 Disclosure Threshold - The U.S. Securities and Exchange Commission unanimously voted on July 18 to adopt final amendments to Rule 701, which provides private companies an exemption from registration for...more
At an open meeting on July 18th, the SEC agreed to issue a concept release exploring modifications and modernization of Rule 701 and Form S-8 for certain offerings for employees, in conjunction with its increase to the...more
Rule 701 under the Securities Act of 1933 provides an exemption from registration for securities issued by non-reporting companies pursuant to compensatory arrangements. ...more
Potential disputes involving unicorns have been a hot topic for the last several years. We predicted that would continue this year in in our webinar and related blog post: The Top Ten Regulatory and Litigation Risks for...more
On March 12, 2018, the United States Securities & Exchange Commission (the “SEC”) fined a late-stage private company $160,000 as a result of its failure to comply with the enhanced disclosure requirements of Rule 701 in...more
On March 12, 2018, the US Securities and Exchange Commission (SEC) brought an action against Credit Karma, Inc., a Silicon Valley-based fintech company, for issuing stock options to its employees in violation of US securities...more
Subject to its limits, Rule 701 permits non-reporting companies to grant employees equity without registration under the Securities Act of 1933. ...more
The U.S. Securities and Exchange Commission brought an action against San Francisco-based Credit Karma on March 12 for issuing employee stock options without a valid registration exemption because the issuer failed to satisfy...more
As mentioned yesterday, Corporation Finance (often referred to as “Corp Fin”) recently issued a Compliance & Disclosure Interpretation with respect to the disclosure delivery requirements under Rule 701(e). I find myself...more
The U.S. Securities and Exchange Commission (SEC) on November 6, 2017, clarified the requirements for delivering financial and other disclosures to employees and other service providers receiving options and other equity...more
Many privately held companies rely on equity compensation awards (typically stock options) to recruit, retain and motivate key employees and other service providers. The issuance of such equity compensation awards generally...more
On Wednesday of last week, at the final meeting of the SEC Advisory Committee on Small and Emerging Companies (soon to morph into the Small Business Capital Formation Advisory Committee), the Committee heard a presentation on...more