Fintech
SEC Harmonizes and Improves “Patchwork” Exempt Offering Framework
Washington, D.C.–(Newsfile Corp. – November 2, 2020) – The Securities and Exchange Commission today voted to amend its rules in order to harmonize, simplify, and improve the multilayer and overly complex exempt offering framework. These amendments will promote capital formation and expand investment opportunities while preserving or improving important investor protections.
A core component of our federal regulatory regime is the requirement that all securities offerings be registered with the Commission or qualify for an exemption from registration.The registration process generally is designed for larger companies with substantial resources. As a result, many entrepreneurs and emerging businesses raise capital by selling securities in reliance on an offering exemption. This important capital formation activity ranges from raising seed capital for new businesses to growth capital for companies of all sizes, including those on the path to a registered initial public offering.
Today’s amendments are the next step in the Commission’s efforts to improve the exempt offering framework for the benefit of investors, emerging companies, and more seasoned issuers. The amendments follow the Commission’s June 2019 concept release and March 2020 proposing release on the harmonization of offering exemptions and benefit from extensive public engagement. The amendments address gaps and complexities in the exempt offering framework that impede access to capital for issuers and access to investment opportunities for investors.
“For many small and medium-sized business, our exempt offering framework is the only viable channel for raising capital. These businesses and their prospective investors must navigate a system of multiple exemptions and safe harbors, each with different requirements,” said Chairman Jay Clayton. “While each component in this patchwork system makes some sense in isolation, collectively, there is substantial room for improvement. The staff has identified various costly and unnecessary frictions and uncertainties and crafted amendments that address those inefficiencies in the context of a more rational framework that will facilitate capital formation for small and medium-sized businesses and benefit investors for years to come.”
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FACT SHEET
Facilitating Capital Formation and Expanding Investment Opportunities by Streamlining Access to Capital for Entrepreneurs
Nov. 2, 2020
The Securities and Exchange Commission today amended the rules under the Securities Act of 1933 to simplify, harmonize, and improve certain aspects of the exempt offering framework to promote capital formation while preserving or enhancing important investor protections.
The amendments generally:
- Establish more clearly, in one broadly applicable rule, the ability of issuers to move from one exemption to another;
- increase the offering limits for Regulation A, Regulation Crowdfunding, and Rule 504 offerings, and revise certain individual investment limits;
- set clear and consistent rules governing certain offering communications, including permitting certain “test-the-waters” and “demo day” activities; and
- harmonize certain disclosure and eligibility requirements and bad actor disqualification provisions.
An updated summary chart of the offering exemptions is included at the end of this fact sheet for reference.
Background
Entrepreneurs and emerging businesses often use the exempt offering framework under the Securities Act for such purposes as raising seed capital for a new business or funding their businesses’ growth. This can be a critical step on the path to an initial public offering and navigating that path has required navigating the complex exempt offering framework. The complexity of that framework reflects its evolution over time through legislative changes and Commission rules that have resulted in differing requirements and conditions for exemption. In many cases, businesses, particularly smaller enterprises, have found the framework confusing and difficult to navigate.
In March 2020, the Commission issued proposed amendments and solicited public comment on its proposals to simplify, harmonize, and improve the exempt offering framework under the Securities Act. Informed by the comments received, as well as other feedback including recommendations of the Commission’s advisory committees, the SEC’s Government-Business Forum on Small Business Capital Formation, and direct outreach to, and engagement with, investors and issuers, the amendments are intended to reduce potential friction points to make the capital raising process more effective and efficient to meet evolving market needs.
Highlights
Integration Framework. When issuers use various private offering exemptions in parallel or in close time proximity, questions can arise as to the need to view the offerings as “integrated” for purposes of analyzing compliance. This need results from the fact that many exemptions have differing limitations and conditions on their use, including whether the general solicitation of investors is permitted. If exempt offerings with different requirements are structured separately but analyzed as one “integrated” offering, it is possible that the integrated offering will fail to meet all the applicable conditions and limitations.
The amendments establish a new integration framework that provides a general principle that looks to the particular facts and circumstances of two or more offerings, and focuses the analysis on whether the issuer can establish that each offering either complies with the registration requirements of the Securities Act, or that an exemption from registration is available for the particular offering.
The amendments additionally provide four non-exclusive safe harbors from integration providing that:
- any offering made more than 30 calendar days before the commencement of any other offering, or more than 30 calendar days after the termination or completion of any other offering, will not be integrated with such other offering(s); provided that:
- in the case where an exempt offering for which general solicitation is prohibited follows by 30 calendar days or more an offering that allows general solicitation, the issuer has a reasonable belief, based on the facts and circumstances, with respect to each purchaser in the exempt offering prohibiting general solicitation, that the issuer (or any person acting on the issuer’s behalf) either did not solicit such purchaser through the use of general solicitation or established a substantive relationship with such purchaser prior to the commencement of the exempt offering prohibiting general solicitation;
- offers and sales made in compliance with Rule 701, pursuant to an employee benefit plan, or in compliance with Regulation S will not be integrated with other offerings;
- an offering for which a Securities Act registration statement has been filed will not be integrated if it is made:
- subsequent to a terminated or completed offering for which general solicitation is not permitted,
- a terminated or completed offering for which general solicitation is permitted that was made only to qualified institutional buyers and institutional accredited investors, or
- an offering for which general solicitation is permitted that terminated or was completed more than 30 calendar days prior to the commencement of the registered offering; and
- offers and sales made in reliance on an exemption for which general solicitation is permitted will not be integrated if made subsequent to any terminated or completed offering.
Offering and Investment Limits. The Commission is amending the current offering and investment limits for certain exemptions.
For Regulation A, the amendments:
- raise the maximum offering amount under Tier 2 of Regulation A from $50 million to $75 million; and
- raise the maximum offering amount for secondary sales under Tier 2 of Regulation A from $15 million to $22.5 million.
For Regulation Crowdfunding, the amendments:
- raise the offering limit in Regulation Crowdfunding from $1.07 million to $5 million;
- amend the investment limits for investors in Regulation Crowdfunding offerings by:
- removing investment limits for accredited investors; and
- using the greater of their annual income or net worth when calculating the investment limits for non-accredited investors; and
- extend for 18 months the existing temporary relief providing an exemption from certain Regulation Crowdfunding financial statement review requirements for issuers offering $250,000 or less of securities in reliance on the exemption within a 12-month period.
For Rule 504 of Regulation D, the amendments:
- raise the maximum offering amount from $5 million to $10 million.
“Test-the-Waters” and “Demo Day” Communications. The Commission is amending offering communications rules, by:
- permitting an issuer to use generic solicitation of interest materials to “test-the-waters” for an exempt offer of securities prior to determining which exemption it will use for the sale of the securities;
- permitting Regulation Crowdfunding issuers to “test-the-waters” prior to filing an offering document with the Commission in a manner similar to current Regulation A; and
- providing that certain “demo day” communications will not be deemed general solicitation or general advertising.
Regulation Crowdfunding and Regulation A Eligibility. The amendments establish rules that permit the use of certain special purpose vehicles that function as a conduit for investors to facilitate investing in Regulation Crowdfunding issuers. The amendments additionally impose eligibility restrictions on the use of Regulation A by issuers that are delinquent in their Exchange Act reporting obligations.
Other Improvements to Specific Exemptions. The amendments also:
- change the financial information that must be provided to non-accredited investors in Rule 506(b) private placements to align with the financial information that issuers must provide to investors in Regulation A offerings;
- add a new item to the non-exclusive list of verification methods in Rule 506(c);
- simplify certain requirements for Regulation A offerings and establish greater consistency between Regulation A and registered offerings; and
- harmonize the bad actor disqualification provisions in Regulation D, Regulation A, and Regulation Crowdfunding.
What’s Next?
The amendments will be effective 60 days after publication in the Federal Register, except for the extension of the temporary Regulation Crowdfunding provisions, which will be effective upon publication in the Federal Register.
Overview of Amended Capital-Raising Exemptions
| Type of Offering | Offering Limit within 12-month Period | General Solicitation | Issuer Requirements | Investor Requirements | SEC Filing or Disclosure Requirements | Restrictions on Resale | Preemption of State Registration and Qualification |
| Section 4(a)(2) | None | No | None | Transactions by an issuer not involving any public offering. See SEC v. Ralston Purina Co. | None | Yes. Restricted securities | No |
| Rule 506(b) of Regulation D |
None | No | “Bad actor” disqualifications apply | Unlimited accredited investors Up to 35 sophisticated but non-accredited investors in a 90 day period |
Form D Aligned disclosure requirements for non-accredited investors with Regulation A offerings |
Yes. Restricted securities | Yes |
| Rule 506(c) of Regulation D |
None | Yes | “Bad actor” disqualifications apply | Unlimited accredited investors Issuer must take reasonable steps to verify that all purchasers are accredited investors |
Form D | Yes. Restricted securities | Yes |
| Regulation A: Tier 1 | $20 million | Permitted; before qualification, testing-the-waters permitted before and after the offering statement is filed | U.S. or Canadian issuers Excludes blank check companies,* registered investment companies, business development companies, issuers of certain securities, certain issuers subject to a Section 12(j) order, and Regulation A and reporting issuers that have not filed certain required reports “Bad actor” disqualifications apply No asset-backed securities |
None | Form 1‑A, including two years of financial statements Exit report |
No | No |
| Regulation A: Tier 2 | $75 million | Non-accredited investors are subject to investment limits based on the greater of annual income and net worth, unless securities will be listed on a national securities exchange | Form 1‑A, including two years of audited financial statements Annual, semi-annual, current, and exit reports |
No | Yes | ||
| Rule 504 of Regulation D |
$10 million | Permitted in limited circumstances | Excludes blank check companies, Exchange Act reporting companies, and investment companies “Bad actor” disqualifications apply |
None | Form D | Yes. Restricted securities except in limited circumstances | No |
| Regulation Crowdfunding; Section 4(a)(6) |
$5 million | Testing the waters permitted before Form C is filed Permitted with limits on advertising after Form C is filed Offering must be conducted on an internet platform through a registered intermediary |
Excludes non-U.S. issuers, blank check companies, Exchange Act reporting companies, and investment companies “Bad actor” disqualifications apply |
No investment limits for accredited investors Non-accredited investors are subject to investment limits based on the greater of annual income and net worth |
Form C, including two years of financial statements that are certified, reviewed or audited, as required Progress and annual reports |
12-month resale limitations | Yes |
| Intrastate: Section 3(a)(11) | No federal limit (generally, individual state limits between $1 and $5 million) | Offerees must be in-state residents. | In-state residents “doing business” and incorporated in-state; excludes registered investment companies | Offerees and purchasers must be in-state residents | None | Securities must come to rest with in-state residents | No |
| Intrastate: Rule 147 | No federal limit (generally, individual state limits between $1 and $5 million) | Offerees must be in-state residents. | In-state residents “doing business” and incorporated in-state; excludes registered investment companies | Offerees and purchasers must be in-state residents | None | Yes. Resales must be within state for six months | No |
| Intrastate: Rule 147A | No federal limit (generally, individual state limits between $1 and $5 million) | Yes | In-state residents and “doing business” in-state; excludes registered investment companies | Purchasers must be in-state residents | None | Yes. Resales must be within state for six months | No |
Modern brands stake on influencer marketing, with 76% of users making a purchase after seeing a product on social media.The cryptocurrency industry is no exception to this trend. However, promoting crypto products through influencer marketing can be particularly challenging. Crypto influencers pose a significant risk to a brand’s reputation and ROI due to rampant scams. Approximately 80% of channels provide fake statistics, including followers counts and engagement metrics. Additionally, this niche is characterized by high CPMs, which can increase the risk of financial loss for brands.
In this article Nadia Bubennnikova, Head of agency Famesters, will explore the most important things to look for in crypto channels to find the perfect match for influencer marketing collaborations.
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Comments
There are several levels related to this point.
LEVEL 1
Analyze approximately 10 of the channel’s latest videos, looking through the comments to ensure they are not purchased from dubious sources. For example, such comments as “Yes sir, great video!”; “Thanks!”; “Love you man!”; “Quality content”, and others most certainly are bot-generated and should be avoided.
Just to compare:
LEVEL 2
Don’t rush to conclude that you’ve discovered the perfect crypto channel just because you’ve come across some logical comments that align with the video’s topic. This may seem controversial, but it’s important to dive deeper. When you encounter a channel with logical comments, ensure that they are unique and not duplicated under the description box. Some creators are smarter than just buying comments from the first link that Google shows you when you search “buy YouTube comments”. They generate topics, provide multiple examples, or upload lists of examples, all produced by AI. You can either manually review the comments or use a script to parse all the YouTube comments into an Excel file. Then, add a formula to highlight any duplicates.
LEVEL 3
It is also a must to check the names of the profiles that leave the comments: most of the bot-generated comments are easy to track: they will all have the usernames made of random symbols and numbers, random first and last name combinations, “Habibi”, etc. No profile pictures on all comments is also a red flag.
LEVEL 4
Another important factor to consider when assessing comment authenticity is the posting date. If all the comments were posted on the same day, it’s likely that the traffic was purchased.
2. Average views number per video
This is indeed one of the key metrics to consider when selecting an influencer for collaboration, regardless of the product type. What specific factors should we focus on?
First & foremost: the views dynamics on the channel. The most desirable type of YouTube channel in terms of views is one that maintains stable viewership across all of its videos. This stability serves as proof of an active and loyal audience genuinely interested in the creator’s content, unlike channels where views vary significantly from one video to another.
Many unauthentic crypto channels not only buy YouTube comments but also invest in increasing video views to create the impression of stability. So, what exactly should we look at in terms of views? Firstly, calculate the average number of views based on the ten latest videos. Then, compare this figure to the views of the most recent videos posted within the past week. If you notice that these new videos have nearly the same number of views as those posted a month or two ago, it’s a clear red flag. Typically, a YouTube channel experiences lower views on new videos, with the number increasing organically each day as the audience engages with the content. If you see a video posted just three days ago already garnering 30k views, matching the total views of older videos, it’s a sign of fraudulent traffic purchased to create the illusion of view stability.
3. Influencer’s channel statistics
The primary statistics of interest are region and demographic split, and sometimes the device types of the viewers.
LEVEL 1
When reviewing the shared statistics, the first step is to request a video screencast instead of a simple screenshot. This is because it takes more time to organically edit a video than a screenshot, making it harder to manipulate the statistics. If the creator refuses, step two (if only screenshots are provided) is to download them and check the file’s properties on your computer. Look for details such as whether it was created with Adobe Photoshop or the color profile, typically Adobe RGB, to determine if the screenshot has been edited.
LEVEL 2
After confirming the authenticity of the stats screenshot, it’s crucial to analyze the data. For instance, if you’re examining a channel conducted in Spanish with all videos filmed in the same language, it would raise concerns to find a significant audience from countries like India or Turkey. This discrepancy, where the audience doesn’t align with regions known for speaking the language, is a red flag.
If we’re considering an English-language crypto channel, it typically suggests an international audience, as English’s global use for quality educational content on niche topics like crypto. However, certain considerations apply. For instance, if an English-speaking channel shows a significant percentage of Polish viewers (15% to 30%) without any mention of the Polish language, it could indicate fake followers and views. However, if the channel’s creator is Polish, occasionally posts videos in Polish alongside English, and receives Polish comments, it’s important not to rush to conclusions.
Example of statistics
Wrapping up
These are the main factors to consider when selecting an influencer to promote your crypto product. Once you’ve launched the campaign, there are also some markers to show which creators did bring the authentic traffic and which used some tools to create the illusion of an active and engaged audience. While this may seem obvious, it’s still worth mentioning. After the video is posted, allow 5-7 days for it to accumulate a basic number of views, then check performance metrics such as views, clicks, click-through rate (CTR), signups, and conversion rate (CR) from clicks to signups.
If you overlooked some red flags when selecting crypto channels for your launch, you might find the following outcomes: channels with high views numbers and high CTRs, demonstrating the real interest of the audience, yet with remarkably low conversion rates. In the worst-case scenario, you might witness thousands of clicks resulting in zero to just a few signups. While this might suggest technical issues in other industries, in crypto campaigns it indicates that the creator engaged in the campaign not only bought fake views and comments but also link clicks. And this happens more often than you may realize.
Summing up, choosing the right crypto creator to promote your product is indeed a tricky job that requires a lot of resources to be put into the search process.
Author
Nadia Bubennikova, Head of agency at Famesters
The BIS, along with seven leading central banks and a cohort of private financial firms, has embarked on an ambitious venture known as Project Agorá.
Named after the Greek word for “marketplace,” this initiative stands at the forefront of exploring the potential of tokenisation to significantly enhance the operational efficiency of the monetary system worldwide.
Central to this pioneering project are the Bank of France (on behalf of the Eurosystem), the Bank of Japan, the Bank of Korea, the Bank of Mexico, the Swiss National Bank, the Bank of England, and the Federal Reserve Bank of New York. These institutions have joined forces under the banner of Project Agorá, in partnership with an extensive assembly of private financial entities convened by the Institute of International Finance (IIF).
At the heart of Project Agorá is the pursuit of integrating tokenised commercial bank deposits with tokenised wholesale central bank money within a unified, public-private programmable financial platform. By harnessing the advanced capabilities of smart contracts and programmability, the project aspires to unlock new transactional possibilities that were previously infeasible or impractical, thereby fostering novel opportunities that could benefit businesses and consumers alike.
The collaborative effort seeks to address and surmount a variety of structural inefficiencies that currently plague cross-border payments. These challenges include disparate legal, regulatory, and technical standards; varying operating hours and time zones; and the heightened complexity associated with conducting financial integrity checks (such as anti-money laundering and customer verification procedures), which are often redundantly executed across multiple stages of a single transaction due to the involvement of several intermediaries.
As a beacon of experimental and exploratory projects, the BIS Innovation Hub is committed to delivering public goods to the global central banking community through initiatives like Project Agorá. In line with this mission, the BIS will soon issue a call for expressions of interest from private financial institutions eager to contribute to this ground-breaking project. The IIF will facilitate the involvement of private sector participants, extending an invitation to regulated financial institutions representing each of the seven aforementioned currencies to partake in this transformative endeavour.
Source: fintech.globa
The post Central banks and the FinTech sector unite to change global payments space appeared first on HIPTHER Alerts.
TD Bank has inked a multi-year deal with Google Cloud as it looks to streamline the development and deployment of new products and services.
The deal will see the Canadian banking group integrate the vendor’s cloud services into a wider portion of its technology solutions portfolio, a move which TD expects will enable it “to respond quickly to changing customer expectations by rolling out new features, updates, or entirely new financial products at an accelerated pace”.
This marks an expansion of the already established relationship between TD Bank and Google Cloud after the group previously adopted the vendor’s Google Kubernetes Engine (GKE) for TD Securities Automated Trading (TDSAT), the Chicago-based subsidiary of its investment banking unit, TD Securities.
TDSAT uses GKE for process automation and quantitative modelling across fixed income markets, resulting in the development of a “data-driven research platform” capable of processing large research workloads in trading.
Dan Bosman, SVP and CIO of TD Securities, claims the infrastructure has so far supported TDSAT with “compute-intensive quantitative analysis” while expanding the subsidiary’s “trading volumes and portfolio size”.
TD’s new partnership with Google Cloud will see the group attempt to replicate the same level of success across its entire portfolio.
Source: fintechfutures.com
The post TD Bank inks multi-year strategic partnership with Google Cloud appeared first on HIPTHER Alerts.
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