REGULATION A OFFERINGS
A Regulation A offering, also known as a small business company offering, allows the issuer to raise up to $5,000,000 in any 12-month period. This exemption from full registration allows smaller companies access to the capital markets without having to go through the expense of filing a full registration statement with the SEC. The issuer will instead file an abbreviated notice of sale or offering circular with the SEC and purchasers of the issue will be given a copy of the offering circular rather than a final prospectus. The same 20-day cooling-off period applies to Regulation A offerings.
TRANSACTIONS WITH FINANCIAL INSTITUTIONS
All transactions with financial institutions are exempt. The USA was designed to protect the individual investor, not the sophisticated financial institution. Financial institutions include:
• Insurance companies.
• Investment companies.
• Broker dealers.
• Pension plans with at least $1,000,000 in assets.
TRANSACTIONS WITH FIDUCIARIES
All transactions with fiduciaries are exempt from registration with the administrator. Transactions with any of the following are considered transactions with fiduciaries and are exempt:
TRANSACTIONS WITH UNDERWRITERS
All transactions with underwriters of securities are exempt from state registration. For example, if XYZ Corporation is selling 10,000,000 shares of its common stock to its investment bank under a firm commitment underwriting agreement, the transaction is exempt from state registration.
All orders that are executed through a broker dealer at the sole request of the customer are considered unsolicited orders and are exempt from registration. The administrator may require proof that the order was unsolicited and may require that the customer sign an acknowledgment to that fact.