SEC Makes Amendments to Regulation D and Related Revisions to Form D

In a final rule issued on February 6, 2008, the Securities and Exchange Commission (SEC) adopted amendments to Regulation D and significant revisions to Form D that generally become effective September 15, 2008. Form D is filed with the SEC in connection with securities offerings that are exempt from federal registration under Regulation D of the Securities Act of 1933, the commonly used federal basis for exempt private placement securities offerings.

The SEC has made the following revisions regarding Form D:

• Filers will be permitted to identify all issuers in a multiple-issuer offering in one Form D filing.
• The requirement to identify as "related persons" owners of 10% or more of a class of the issuer's equity securities has been deleted.
• The requirement to provide a business description of the issuer has been replaced with a requirement to classify the issuer by industry from a pre-established list of industries.
• Revenue range information for the issuer, or net asset value range information in the case of hedge funds and certain other investment funds, will be required (with an option to decline disclosure).
• More specific information will be required regarding the exemption claimed by the issuer from registration under the Securities Act, as well as any exclusion claimed from the definition of "investment company" under the Investment Company Act of 1940.
• Form D filers will be required to report the date of first sale in the offering and whether the offering is expected to last more than one year.
• Amendments to a previously filed Form D will be required by reason of mistakes of fact, errors or changes to information, or the passage of one year.
• Central Registration Depository (CRD) numbers will be required for both individual recipients of sales compensation and associated broker-dealers.
• The current requirement to disclose information on a wide variety of expenses and applications of proceeds will be replaced with a requirement to report only expenses paid for sales commissions and finders' fees, as well as proceeds that are used for payments to executive officers, directors and promoters.
• The current federal and state signature requirements will be replaced by a combined signature requirement that includes an undertaking to provide offering documents to regulators on request (subject to applicable law), a consent to service of process and a certification that the issuer is not disqualified by rule from relying on an exemption claimed.
• A limited amount of free writing in "clarification" fields will be permitted to clarify certain information provided.

In addition to these important revisions, the SEC will require that Form D be filed electronically after March 16, 2009. Between September 15, 2008 and March 16, 2009, issuers may file Form D either electronically or on paper. The SEC is also adopting certain amendments to Regulation D in order to address concerns about general solicitation that could result from electronic filing and the corresponding greater public availability of Form D information over the Internet.

If you are involved in a company that is considering raising funds through an exempt private placement offering of securities, or otherwise have questions regarding how the SEC's amendments to Regulation D and the revisions to Form D might affect you, please contact your attorney.