SECTION 2
Forms
Title 2
Title 3
Title 4

SECTION 3
Securities Act
Exchange Act
Sarbanes-Oxley Act
Title 4
Title 5

SECTION 4
'33 ACT Reg
'34 ACT Reg
Reg. S-K
Reg. S-X
Title 6

University of Denver – Spring 2008

Instructors: Bloomenthal/Salcito

Materials: Going Public and the Public Company on the Web

NOTE: If you read this Syllabus prior to January 15, 2008, when this class commences, the materials were being updated, among other things, to reflect extensive rule changes made in November and December of 2007 by the SEC that impact a newly characterized class of  "smaller reporting companies." . The materials  and assignments are being updated as we speak.

ASSIGNMENTS

Perspective about our lack of perspective: (An Introduction to the Syllabus)

     THIS COURSE REQUIRES THAT YOU PREPARE FOR CLASS AND ATTEND CLASS. REPEATED ABSENCES AND LACK OF PREPARATION WILL SERIOUSLY AFFECT YOUR GRADE ON THE FINAL EXAMINATION.

The Securities Acts consists of two statutes -- the Securities Act of 1933 ('33 Act or Securities Act) and Securities Exchange Act of 1934 ('34 Act or Exchange Act)) -- that constitute a single statutory scheme. Those aspects of Securities Acts (plural) relating to going public and being a public company are the focus of this course The SEC is a so-called independent agency and the President subject to approval of the Senate appoints its five members. The SEC administers and enforces four other Acts (the Trust Indenture Act, the Investment Company Act, Investment Advisers Act, and Public Utility Holding Company Act),, which we do not consider. The Securities Act (singular) requires a company making a public offering to register the securities and use a prospectus in connection with the offering. The Exchange Act, among other things, requires public companies to file an annual and periodic reports with the SEC and for most public companies the distribution of an annual report to its shareholders. Our primary focus is on the distribution of securities, which primarily implicates the Securities Act, but registration and reporting under the Exchange Act also plays a role in the distribution process and has to be taken into account in that context. There is much more to the Exchange Act, including proxy and tender offer regulation, registration of broker-dealers and stock exchanges that we do not take into account. Both Acts create private actions for damages under prescribed circumstances and provide the Securities and Exchange Commission with an arsenal of enforcement weapons. We will attempt to make you aware of private actions and SEC enforcement as the consequences of non-compliance with the securities laws can be severe. We cannot, however, devote significant time to securities litigation, a complex and fascinating area that is a course in itself.  We devote significant but a limited amount of time to the actual preparation of a registration statement/prospectus.. To really learn how to prepare a registration statement/prospectus requires working on one for the four to six months that goes into the preparation, involving numerous drafting sessions, dealing with the SEC comment letters, and repeating the process in connection with several different offerings. We, nonetheless, will give you a birds' eye view of the content of a prospectus.

What we attempt to do, is to study in depth the legal framework for completing public and offerings  and also introduce you to private offerings. The Securities Acts do not stand still. Effective December 5, 2005, the SEC adopted Securities Offering Reform (SOR) regulations significantly changing the public offerings process. The Commission in the fall of 2007 adopted a new disclosure regime for smaller reporting companies and took a number of other significant steps to facilitate private offerings.. There can be no artful practice of securities law without an understanding of the underlying legal concepts embodied in the Securities Acts that govern the public offering process. We also place considerable emphasis on the institutional arrangements and the milieu in which public offerings take place. Those institutional arrangements with only modest modification have been in place for over 100 years, involving investment banks acting as lead underwriters and organizing an underwriting syndicate that make it possible once the registration statement becomes effective to complete an offering in an hour or two. Although the SOR rules do not significantly impact the institutional arrangements among underwriters and participating dealers, the legal framework under which securities are marketed  changed dramatically as of  December 1, 2005, the effective date of the SOR rules. We add to the above, those aspects of Sarbanes-Oxley Act of 2002 that must be taken into account by a company going public. We also expose you, but out of order, the exemptions available to raise seed capital prior to going public. Finally,  we will try to make you aware, but barely of the blue-sky laws, the state securities laws that also seek to require registration of securities. Our focus, however, is on the National Securities Markets Improvement Act of 1996 (NSMIA) to the extent it pre-empts state securities registration, which should be an objective of a company contemplating going public. This involves listing on Nasdaq or othe stock market and we attempt to take into account the criteria that have to be met in order to be listed and preempt the blue sky laws. Our point is that you are not getting the whole picture, but an in-depth view of important aspects of securities practice and going public. Securities laws are broad in scope, dynamic, and fluid. We have opted to cover those areas that we believe will be most valuable to an entry-level associate.

This course assumes conventional financing by corporations offerings stock, debentures or bonds, all of which are clearly securities. We do not, therefore, spend any time studying exotic securities, such as orange groves, condominiums, gold coins, interests in life insurance proceeds of aid's victims, etc., sold under circumstances that such sales may constitute the sale of an investment contract and as such a security. Our focus is on the principal types of financing handled by investment bankers.

Assignments often cover a block of materials rather than a discrete section or sections. Your guide to how these materials will be approached consists of the hypotheticals. This is a work in progress and we will be revising hypotheticals and related materials as we approach the first day of class. We reserve the right to take advantage of the flexibility afforded by materials on the web to add stuff to reflect current developments. Securities practice problems in real life do not come neatly compartmentalized, but have to be seen from the broader perspective of transactions and the process governing those transactions. The casebook as a method of course study was introduced at Harvard Law School in the 19th century. The case method has withstood the test of time as it is still being used as the primary method of instruction in law schools. It has its limitations, however, for our course as securities regulation depends in large part on statutes, regulations, and administrative interpretations. Statutes and regulations, unlike the verbosity frequently encountered in judicial decisions, do not contain words that can be disregarded. Statutes and regulations have to be read closely. We are also describing institutional ways of offering and placing securities. The legal framework has to be considered in the broader context of how things are done in our capital markets. We have, therefore, for the most part, opted for a text presentation with links to the source material databases in order to provide a context for the source material. The text is coupled with hypotheticals that will be the basis for our class discussions. Our objective is to use the hypotheticals as a catalyst for bringing together the legal and institutional frameworks. Our text discussion often has more than you can absorb within the time frame we have allowed in this syllabus. When you encounter that situation, focus on the parts you need to know to respond to the hypotheticals. You will not, however, be penalized for knowing more than you need to know -- you are on your own in that regard.

     We will be doing a lot of going back and forth between registration under the Securities Act and registration and reporting under the Exchange Act. This puts the focus on the interrelationship of the two acts; something that is often overlooked in basic securities regulation courses that tend to focus on the Securities Act.  The two Acts share a common source (the integrated disclosure system) for determining disclosure content, and seasoned issuers can incorporate by reference significant segments of their reports under the Exchange Act into Securities Act registration statements in connection with follow-on public offerings. This approach entails some duplication, but to the extent it does it also serves as a review of what has gone before. The SOR rules also impact the interrelationship of the two Acts in this context. We reserve the right to accelerate or reorder assignments with adequate advance notice, if it appears appropriate.

     In choosing to put our primary focus on offerings of securities that will qualify as Nasdaq Capital Market securities, we are short-changing to some extent small company financing. The reality is that many of you are more likely to begin with small company financing and may not have an opportunity until later, if at all, to be involved in mega IPOs. The registration process in terms of filings, free-writing, and the like does not differ to a significant degree for a small company. The Commission in the fall of 2007 took a number of steps to coordinate smaller company financing with that of companies that are listed on a stock exchange in conjunction with their initial public offering.  To rectify  our slighting of smaller company financing, we will  attempt to make incorporate the extent to which smaller companies can simplify the preparation of the Securities Act registration statement/prospectus.