WilmerHale
MONTH-IN-BRIEF (Dec 2024)
Investment Adviser and Private Companies Penalized for Failing to Timely File Form D
By Karen Liu, Reid & Wise LLC
On December 20, 2024, the U.S. Securities and Exchange Commission (the “SEC”) announced charges against a registered investment adviser and two private companies for failing to timely file Forms D with respect to unregistered securities offerings.
Pursuant to Rule 503 of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), any issuer relying on Rule 504 or Rule 506 of Regulation D must file with the SEC a Form D for each new offering of securities no later than 15 calendar days after the first sale of securities in the offering.
The three cases share similar fact patterns. For the case against the investment adviser, the securities issuers are the private funds under the adviser’s management. For the other two cases against private companies, the securities issuers are the two private companies themselves. In all the three cases, the issuers conducted unregistered offerings under Regulation D and also engaged in certain communications that constituted general solicitation for such offerings. The SEC reasoned that because the issuers “engaged in general solicitation, the offerings could not have been conducted as exempt offerings under Section 4(a)(2) of the Securities Act and therefore could not have been conducted without reliance on Rule 504 or Rule 506(c) of Regulation D,” which necessitates timely Form D filing with the SEC.
