Partners Erin Martin and Albert Lung spoke with Law360 about recent fines from the US Securities and Exchange Commission (SEC) against several companies for alleged violations of Regulation A. Erin and Albert said the fines show companies should be aware of the rules governing Regulation A, which allows companies to raise money without having to divulge as much information as they would in a registered offering.
"It is underscoring that Regulation A is not a free-for-all," Erin said.
"To the extent a company wants to avail itself of the benefits that Regulation A provides, they have to be cognizant of the burdens associated with it and ensure that they remain compliant."
Albert said smaller companies that take up Regulation A offerings typically have fewer resources, and some may not hire sophisticated legal counsel to guide them through the process.
"It's about time that the SEC started cracking down," he said.
"Because you can't let this go on."