Maybe still the single best measure ever adopted in order to facilitate capital formation, the shelf registration statement provides an issuer with the most flexibility to take advantage of windows of opportunity and to access the capital markets quickly and efficiently.  We discuss eligibility to use a shelf registration statement, the shelf registration process, and shelf takedowns in this What’s the Deal? guide. Continue reading here.

On August 5, 2020, the Securities and Exchange Commission will hold an open meeting, which will be webcast, in order to, among other things, consider whether to propose amendments to the advertising rules for business development companies and registered investment companies.  The SEC also will consider whether to propose rules and form amendments intended to modernize the disclosures required of open-end mutual funds.  See the meeting notice for additional details here.

Speaking at a recent PLI Investment Management Institute session, Securities and Exchange Commission Division of Investment Management Director Nadia Blass provided a number of insights regarding future rulemaking.  Among other things, Division Director Blass noted some lessons learned as a result of the pandemic.  For example, she noted that during this period, it became evident that funds and advisers remain very dependent on paper communications.  It may be time to reconsider, she noted, the SEC’s approach to fund shareholder and client communication.  The Director also commented on the generally favorable experience of boards of directors with virtual meetings, and considered whether it may make sense for the temporary relief relating to virtual meetings to be made permanent.  She noted that the SEC has a number of next steps on outstanding Division of Investment Management proposals, including on fund of fund arrangements, the use of derivatives by funds, fund valuation, and investment adviser advertising.  The Director also addresses a topic that has been central to many speeches given by SEC Chair Clayton, which is making private investments more accessible to Main Street investors, including through target date funds and closed end fund of funds.  Director Blass posed a number of questions as to which the Division Staff seeks input regarding closed end fund structures and that would be appropriate for retail investors.  See the full text of her remarks here.

This practice note discusses 10 practice points that can help you, as counsel to underwriters or initial purchasers, skillfully navigate the task of reviewing and negotiating comfort letters. A comfort letter is a letter delivered by an issuer’s independent accountants to the underwriters or initial purchasers that provides certain assurances with respect to financial information included in a registration statement, prospectus, or offering memorandum used for a securities offering. Continue reading here.


On July 22, 2020, the US Securities and Exchange Commission (SEC) published supplementary guidance in the form of a policy statement regarding the proxy voting responsibilities of investment advisers under Rule 206(4)-6 under the Investment Advisers Act of 1940. This Legal Update provides further detail. Continue reading here.


This First Analysis article discusses the amendments adopted by the U.S. Securities and Exchange Commission on May 21, 2020 in connection with financial statement disclosures on business acquisitions and dispositions as required by Regulation S-X’s (17 C.F.R. §§ 210.1-01 – 12-29) Rule 3-05 (Financial Statements of Businesses Acquired or to be Acquired (Rule 3-05)), Rule 3-14 (Special Instructions for Real Estate Operations to be Acquired (Rule 3-14)), Article 11 on Pro Forma Financial Information (Article 11), and other related rules and forms. The Amended Rules also amended investment companies’ financial reporting of acquisitions by adopting a new Rule 6-11 of Regulation S-X (Financial Statements of Funds Acquired or to be Acquired (Rule 6-11)) and revising Form N-14 for financial reporting of acquisitions involving investment companies. Continue reading here.


Issuers with outstanding fixed-to-floating or floating rate preferred securities or depositary shares representing an interest in underlying preferred securities will soon need to consider how to address operative LIBOR-based provisions in advance of the cessation of LIBOR.  The governing documents for many outstanding depositary shares and preferred securities that reference LIBOR do not envision a permanent cessation of LIBOR.

An issuer seeking to amend the terms of an outstanding preferred security must comply with the provisions of the underlying governing document (in Delaware, the Certificate of Designations).  Typically, the Certificate of Designations provides that in the case of an amendment that would adversely affect the special rights, preferences or privileges of the outstanding preferred security, the issuer must first obtain approval from the holders of at least a majority or supermajority of the outstanding shares, voting separately as a single class from any other outstanding series of preferred stock.  However, the Certificate of Designations can typically be amended without holder consent so long as an amendment does not adversely affect the rights, preferences, privileges and voting powers of the particular series.

In the absence of a sufficient number of available LIBOR quotes, the Certificate of Designations will often include language that will look back to the last available LIBOR quote in effect for the prior dividend period.  The absence of newly available LIBOR quotes would practically result in a fixed rate preferred security.  The inclusion of a new floating rate standard (in the absence of newly available LIBOR quotes) may be consistent with the intention of having offered investors a floating rate preferred security.  Issuers wishing to resolve this potential problem may want to consult counsel regarding these securities, which have gotten significantly less attention than have floating rate notes.


PwC and CB Insights’ latest MoneyTree Report reports a 3% increase in U.S. venture capital deals this past quarter. There were 1,374 deals in the second quarter of 2020 compared to 1,336 deals in the first quarter 2020. This increase comes after a three-quarter decline in venture deals. While the number of deals is down 18% year-over-year, there were 69 mega-rounds, or capital raises of over $100 million—a historic quarter high. Stripe, a late-stage fintech payments company completed the largest deal this quarter, raising $600 million. As private companies raise larger amounts of capital, there has also been a shift toward later-stage deals as shown below.

Source: PwC/CB Insights MoneyTree™ Report Q2 2020

Following three quarters of decline, IPO exits rebounded. In the second quarter of 2020, there were 24 IPOs of U.S. VC-backed companies. The average time to exit has remained relatively consistent since 2018 as shown below. M&A activity continued to decline this quarter, dropping to 120 exits in the second quarter 2020 from 155 in the first quarter of the year. Of the top five highest valued M&A exits, three were fintech companies.

Source: PwC/CB Insights MoneyTree™ Report Q2 2020

For the fourth quarter in a row, fewer companies have been valued at unicorn status (over $1 billion). There were eleven new U.S. VC-backed unicorns in the second quarter 2020, bringing the total number of unicorns this year to 209. Currently, according to the report, Stripe and SpaceX, a space tech startup, are the most highly valued U.S. unicorns with $36 billion valuations each.



The staff of the Securities and Exchange Commission’s Division of Corporation Finance issues comment letters relating to registration statements and periodic report filings. This note examines the issues raised in SEC staff comment letters for IPOs relating to the valuation of equity awards issued to employees at a value that may be considered less than fair value (often referred to as “cheap stock”). Because valuing equity instruments that do not have an active market is quite subjective, often, comments are raised by the SEC staff in connection with the issuer’s IPO registration statement. The SEC staff focuses on the price variation between the fair value of the company’s common stock at the time of issuance as compared to the anticipated IPO price. Continue reading here.


Today, the Securities and Exchange Commission adopted amendments to the proxy rules.  The amendments amend the definition of “solicitation” in Exchange Act Rule 14a-1(l) in order to make clear, consistent with the SEC’s longstanding view, that it includes proxy voting advice, with certain exceptions.  The amendments also revise Rules 14a-2(b)(1) and (b)(3), which provide exemptions from the information and filing requirements of the proxy rules.  Reliance on these exemptions will be available subject to satisfaction of specified conditions, which include conflicts of interest disclosure, and the adoption of and public disclosure of written policies and procedures designed to ensure that registrants that are the subject of proxy advice have available to them such advice when it is disseminated to the proxy advisory firm’s clients.  There are several non-exclusive safe harbors in order to provide certainty that the proxy advisory firm’s policies and procedures satisfy the principles-based requirements.  The amendments also modify Rule 14a-9 to include examples of when the failure to disclose certain material information in proxy voting advice could, depending upon the particular facts and circumstances, be considered misleading within the meaning of the rule.  The amendments will be effective 60 days after publication in the Federal Register, but affected proxy voting advice businesses subject to the final rules are not required to comply with the Rule 14a-2(b)(9) amendments until December 1, 2021.

The SEC supplemented prior guidance issued to investment advisers regarding their proxy voting responsibilities.  The SEC’s prior guidance discussed how the fiduciary duty and rule 206(4)-6 under the Investment Advisers Act of 1940 relate to an investment adviser’s exercise of voting authority on behalf of its clients.  This supplemental guidance will assist investment advisers in fulfilling their proxy voting responsibilities in light of these amendments to the solicitation rules under the Exchange Act.  The guidance will be effective upon publication in the Federal Register.

See the press release and fact sheet; the final rule; and the guidance.

Detailed Legal Updates will follow.