Howard E. Berkenblit is a partner and leader of the firm’s Securities & Corporate Governance Group. He specializes in counseling both public and private companies involved in equity and debt financings and ongoing corporate governance and disclosure matters, stock exchange listing standards and Sarbanes-Oxley Act and Dodd-Frank Act compliance. He also advises Israeli and other international companies that seek to have their securities traded in the United States, as well as real estate investment trusts that engage in securities offerings and governance initiatives.
In addition, Mr. Berkenblit works with clients on mergers and acquisitions, capital raising and general corporate matters. He has written articles and spoken on many topics including Sarbanes-Oxley, Dodd-Frank and a range of securities law issues impacting U.S. and foreign companies. In this Wall Street View, our host spoke with Howard Berkenblit from Sullivan & Worcester LLP at the Aegis Capital Corp. Healthcare & Technology Conference 2014 in Las Vegas, NV.
Mr. Berkenlit opens with his opinion about the changes regarding accredited investors, “What’s interesting is there’s been a lot of attention about crowdfunding, about some of the changes to allow advertising, general solicitation to accredited investors, but one thing that’s gotten overlooked is the lingering piece of Dodd-Frank that actually requires the SEC to periodically reassess the definition of accredited investor. So things like the test for who qualifies like there’s an income test – someone makes over $200,000 a year they’re an accredited investor or has a million dollars of net worth, those tests have been around for a long time. $200,000 today is not what it used to be, so there’s a mandate in Dodd-Frank for the SEC to index those, to maybe update them a bit and I think that’s been overlooked but that’s gonna start happening, the SEC started to talk about the fact that they’re gonna amend those rules.”
He adds, “This is in some ways a counter to the efforts to increase the ability to reach out to accredited investors, so the JOBS Act made it – allows solicitation, advertising accredited investors which was designed to allow – make it easier to raise capital so companies could reach out to more people, but now this would counteract that by shrinking the pool of people into a smaller group of accredited investors.”
Mr. Berkenblit explains why the changes are occurring, “The accredited investors have a certain status that the test are deemed to make them more sophisticated and as a result the SEC rules allow companies to reach out to them without giving them as much information maybe a little more quickly because they’re deemed to be able to fend for themselves and I think the feeling was again $200,000 like I was earlier, is not what it used to be, it’s certainly a lot of money but it’s not as hard to get to that level or a million dollars.”
He concludes by touching on Reg D Rule 506, “If you’re an accredited investor, there’s no limit at all to how much you can invest, there’s no limit to how much the company can raise, you know over time there might be certain - what we call integration issues but for an individual investor, you know as long as the company is following the rules, they’re not limited, they’re accredited so it’s again another vehicle into the prime vehicle for companies to raise money.” For more information, check out his website at www.sandw.com/professionals-12.html.
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