On October 30, 2023, the Securities and Exchange Commission (the “Commission") issued an Order exempting brokers and dealers from the requirements of Rule 15c2-11(g) (the “Rule") under the Securities Exchange Act of 1934, as amended, with respect to fixed-income securities that are sold in compliance with the safe harbor in Rule 144A (the “Rule 144A") under the Securities Act of 1933, as amended, for resales to Qualified Institutional Buyers (“QIBs"). As a result, issuers of Rule 144A fixed-income securities will not have to publish public information in order for brokers to quote their securities and facilitate trading.
Private Placements
SEC Adopts New Final Rules for Clearance and Settlement; Proposes Changes for Investment Adviser Rules
On February 15, 2023, the Securities and Exchange Commission (the “SEC") adopted final rule changes intended to reduce risk in clearance and settlement for most broker-dealer securities transactions and proposed new rules designed to enhance safeguards for customer assets managed by investment advisers.
SEC Staff Issues Cautionary Guidance Related to Business Combinations with SPACs
There were more initial public offerings (“IPOs") of special purpose acquisition companies (“SPACs") in 2020 alone than in the entire period from 2009 until 2019 combined, and in the first three months of 2021, there have been more SPAC IPOs than there were in all of 2020. All of these newly public SPACs are looking for business combinations and many private companies are or will be considering a combination with a SPAC as a way to go public.
Nasdaq Amends Proposed Rules to Allow Primary Direct Listings
As discussed in Gibson Dunn’s Current Guide to Direct Listings, the New York Stock Exchange (NYSE) recently amended its rules to permit a primary offering in connection with a direct listing. The Nasdaq Stock Market LLC (Nasdaq) also had proposed rules permitting primary offerings in connection with a direct listing.[1] On February 24, 2021, in the course of the SEC’s review, Nasdaq amended its original proposal to bring its rules more in line with those adopted by the NYSE and approved by the SEC – clearing up some confusion caused by the original proposal.[2]
SEC Proposes Changes to Rule 144, Form 144, Form 4 and Form 5
On December 22, 2020, the Securities and Exchange Commission (the “SEC") proposed and published for comment amendments to Rule 144, Form 144, Form 4, Form 5 and Rule 101 of Regulation S-T. These amendments primarily seek to (a) mitigate the risk of unregistered distributions in connection with sales of market-adjustable securities under the current Rule 144 safe harbor by revising the holding period for such securities to begin upon the conversion or exchange of such securities, and (b) update and streamline Form 144 by mandating electronic filing and eliminating the Form 144 filing requirement with respect to non-reporting issuers. Comments on the proposed rules will be due 60 days after publication of the proposal in the Federal Register and may be submitted electronically using the SEC’s internet comment form (http://www.sec.gov/rules/submitcomments.htm) or by mail to the following address: Vanessa A. Countryman, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. All submissions should refer to File Number S7-24-20.