Securities Law
Securities Law
I provide Securities Act Rule 4(a)(1) and Rule 144 opinion letters to qualified shareholders who need one to remove restrictive legends from restricted stock so they can prepare to sell it on the open market. I also represent issuing companies who need adequacy of public information attorney opinion letters to file with OTC Markets. And I represent stock transfer agents who are sued and need of local Florida defense counsel.
Who Qualifies
Typically, the vast majority of the cases I see involve stock: (a) issued by a company that is not a shell company, subject to the Securities Act, and current in its reporting to the SEC, (b) issued to a shareholder who is not an affiliate of the company, and (c) held by the shareholder for six months or more. If you have held the stock for a year or more, a different subsection/exemption may apply to you. Call or write to me to discuss this.
How Fast
I turn around the opinion letters pretty quick, but the turn around time for a particular letter varies depending on: (a) how quickly the shareholder gets me the information and documentation I need to do my due diligence; (b) how many documents and transactions I have to review and understand; (c) whether the information in the documentation matches (i.e. names, amounts, dates, etc.); (d) how many issuing company reports I have to review; (e) whether or not I have a hard appointment that day/week (i.e. hearing, deposition, mediation, or trial); and (f) the method and speed of payment. Usually, I can turn around a letter in 3-4 days-especially if the shareholder is organized, prepared, and responsive.
What I need
First, I need the relevant names (the full legal name of the shareholder and the full legal name of the issuer-the company that issued the stock).
Second, I need to know the number of shares you want me to include in the letter.
Third, I need the document(s) that reflects how, when, and why the stock was issued to you. This is usually a Subscription Agreement (aka the purchase agreement). However, if you acquired the stock some other way (i.e., work for stock, converted note after a loan, company buyout, gift, etc.), then you may have a different kind of agreement (i.e., Independent Contractor Agreement, Employment Agreement, Promissory Note/Loan Agreement, Notice of Conversion, Share Exchange Agreement, Gift Form, etc.). Regardless, I just need the applicable agreement or document-preferably one that is fully dated and fully executed. Also, if you have the applicable Board Consent, Board Resolution, Issuance Resolution, those are very helpful. If you don’t have all or some of the necessary documentation, it’s OK. We can just ask the issuer or its agent for copies.
Fourth, I need the date you offered sufficient consideration for the stock, or the date it was gifted to you. Usually, this is the date that you made payment to the issuer (date of the check, date of the bank wire transfer), but depending on the transaction and the operative document, it can also be the date you and the issuer agreed the stock was earned and vested, the date you finished providing services to the issuer, the date of the company buyout, etc.
Fifth, if you hold the shares in book entry form, I also need a copy of your account statement with all applicable transaction dates. If you don’t have one, just ask the stock transfer agent (STA) for a copy. This document will reflect the date the stock was actually deposited into your account and usually follows the date of the agreement and the date the monies were paid. If you hold the shares in physical certificate form, I just need a copy of the certificate(s).
Finally, I need written confirmation that you are NOT an affiliate of the company. An affiliate or insider is a director, an officer, and/or a ten percent (10%) or greater voting stockholder. And if you are or were an employee of the company, I’ll need your title, position, and start and end dates. And if you are an affiliate of the company, I might be able to do a letter for you, but just be advised, there are certain rules that apply to affiliates (i.e. 1% limitation and cannot use rule 4(a)(1). I also may need confirmation that you are NOT an issuer, dealer, and underwriter.
What it Costs
My rates start at $250 for a standard rule 144 opinion letter, but to qualify for that price, certain criteria must be met. Exact pricing depends on the number of transactions, the complexity of the project, how quickly you want the letter, the quality of the documentation and whether the information in the documentation lines up, the status and reporting of the issuing company, and whether I have done a letter for you before and if that letter involves the same issuer and the same transaction. Most of the one transaction 144 letters I write are priced at $295, and most of the one transaction 4(a)(1) letters I write are priced at $350. I reserve the right to examine the documentation and the company status and reporting to price each project. If the time required is significantly more than I would spend on a standard letter, we’ll have a discussion about it first, and we will reach an agreement as to price before the work continues, before the letter is drafted, signed and issued, and before the bill is due. Most of the projects that cost more than $350 are because of the number of transactions, poor documentation, and/or a request for a 144 letter where the issuing company is not a reporting company and does not have 3 10-Qs and a 10-K on file with the SEC. You will always know how much the project will cost before the work is completed and the bill is due.
Rule 144 Generally
Rule 144 is the most common exemption that allows the resale of unregistered securities in the public stock market, which is otherwise illegal in the U.S. The regulation gives a specific set of conditions that a shareholder must meet in order to sell unregistered, “restricted,” or “controlled” securities in the public marketplace.
For a shareholder to sell securities (such as stock, bonds, equities) on the public stock market, the securities and sale need to be registered with the U.S. Securities and Exchange Commission (SEC). Securities that are not registered or that are labeled as “restricted” or “controlled” generally cannot be sold or resold on the public market. However, there are several exemptions for the resale of restricted securities, and Rule 144 is the most commonly used exemption; however, Rule 4(a)(1) may apply too. And I also do Reg-A letters, S-1 letters, and the like.
Let’s Connect
Call or write me, and we’ll determine whether you qualify for an exemption, and if so, which one.