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Still Embracing Abundance

January 28, 2016

“Embrace Abundance.”  As many of our loyal, long-time customers will recall, that was the tagline of Securities Mosaic (then Knowledge Mosaic) a few years ago, as we were engaged in an aggressive content expansion initiative that would complement our core Securities offering with administrative materials from dozens of federal regulators.  The most direct legacy of that vision today is our Laws, Rules, and Agency Materials search page, which still offers “abundant search” (not to mention alerting) across more than a thousand federal and SRO data sets.  You want Memoranda of Understanding from the CFTC?  Check. Dodd-Frank rulemaking from the Department of the Treasury? Check. FCPA enforcement releases from the Department of Justice?  Check. Current FINRA rules?  Check.  Want to search across all of them at once?  No problem.


A lot has happened to Securities Mosaic (not to mention the legal and securities market as a whole) since then.  But one thing that’s remained constant is our commitment to the concept of abundance.  Today more than ever, our product is distinguished by the breadth and abundance of its collection, which has continued to expand significantly in recent years.  To cite three prominent examples, we’ve exponentially increased our store of No-Action Letters, added a complete archive of SEDAR filings, and made available over 20,000 Private Placement Memoranda for issuances under Regulation D, Regulation S, and Rule 144A.

And we’re not stopping there.  Here’s a preview of what new content is coming soon to Securities Mosaic subscribers.  Within the next week or two, our PPMs database will be augmented by a second data source exclusively dedicated to recent 144As.  Jump on the search page in mid-February, and you’ll see an additional 400 such documents representing a thousand new unregistered securities offerings, with more in the pipeline.  Moreover, as Winter fades to Spring, we’ll debut another major new searchable database: UK Filings, featuring documents from the National Storage Mechanism of the UK’s Financial Conduct Authority.

With the addition of Canadian and UK filings– not to mention the thousands of non-U.S. prospectuses scattered throughout our PPMs database — Securities Mosaic takes a major step toward offering a content portfolio that better reflects the truly global and integrated character of Securities and Capital Markets in the 21st Century.  To embrace abundance means, in large part, to extend beyond the political boundaries of the U.S.  (To varying degrees, some of our competitors still tend to be confined in this way.)

It also continues to mean extending beyond, or recognizing the fluidity of, practice area boundaries.  “Securities” does not exist in isolation any more than the U.S. exists in isolation in today’s global economy.   Most obviously, M&A and Banking/Finance can be understood as adjacent practice areas, so often tightly intertwined with companies’ pursuits on the capital markets.  Factor in securities disclosure obligations by public companies, and an even broader picture emerges — encompassing any and all material corporate actions (especially if they are subject to regulation).

So Securities really is a mosaic.  And it includes a broad swath of content, not confined by arbitrary boundaries or locked up in silos.  We’ve understood that for a long time, and even as we’ve evolved and refined our product vision over the years, we’ve never wavered from this embrace of abundance. Sure, we’ll keep innovating and develop new functionalities and search capabilities (think: Reference Retriever, batch download, new filer type search fields) — but if the content isn’t there first, what good is searching?  Content is king.

New feature now live: Limit your EDGAR search to companies with these key SEC-recognized filer types

December 11, 2015

Users of the Lexis Securities Mosaic SEC Filings page are now able to limit their search by an array of filer-specific characteristics, including Accelerated status (Large Accelerated, Non-Accelerated, etc.), Foreign Private Issuer, and Well-Known Seasoned Issuer. See the complete list of new search filters below.

Most of these designations offer qualifying filers various regulatory accommodations, including exemptions from certain disclosure obligations.  In this way, they complement (and will be NEWadjacent to) our existing search field for Emerging Growth Company status under the JOBS Act, which we introduced two years ago.

Foreign Private Issuer (FPI):  As a way of encouraging foreign companies to access U.S. capital markets, the SEC historically has made significant regulatory accommodations to foreign companies that qualify as “foreign private issuers.“  (Not all foreign-incorporated filers qualify as FPIs; the coveted status is limited to companies that are truly foreign in nature – that is, without substantive ties to the U.S. in the form of significant stockholders, executives, assets, or business operations.)  Among the SEC filing requirements waived for FPIs are quarterly reporting obligations, proxy reporting, and disclosures for insider trading and executive compensation.

Well-Known Seasoned Issuer (WKSI):  As the name implies, a WKSI is an issuer with a proven track record, making it eligible to benefit from certain regulatory accommodations.  Most prominently, when an issuer qualifies as a WKSI, it can register its securities under the Securities Act of 1933 on a shelf registration that becomes effective automatically upon filing.  (The form type used is S-3ASR; the acronym is “Automatic Shelf Registration”). This streamlined process provides flexibility for a WKSI to time securities sales to meet market conditions, without waiting for the Division to review and comment upon a registration statement and declare it effective.

Business Development Company (BDC): A BDC is a special investment vehicle designed to facilitate capital formation for small companies. Although BDCs are a type of registered investment company, they are exempt from many of the regulatory constraints imposed by the Investment Company Act of 1940, including restrictions recently implemented as part of the Volcker Rule of the Dodd-Frank Act.   Consequently, BDCs have become increasingly popular.

Real Estate Investment Trust (REIT):  A U.S. company that acts as an investment agent specializing in real estate (including real estate mortgages) may qualify for REIT status, allowing it to avoid or substantially reduce corporate tax burden.  In return, the majority of a REIT’s earnings from its real estate holdings and operations are distributed back to shareholders.  Investors in real estate get in REITs a structure similar to what mutual funds provide for investment in stocks.  REITs typically own commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and even timberlands.

Accelerated Status:  Refers to a range of five SEC categories dictating the relative stringency of a filing company’s obligations, and determined by its size (as measured primarily by public float). The largest filers, those in the “Large Accelerated” and “Accelerated” categories, are subject to the most onerous regulatory framework, including “accelerated” deadlines for the filing of their periodic reports. (Large Accelerated filers have an even shorter timeframe to file than Accelerated filers.)   On the other end of the spectrum, those filers qualifying as “Smaller Reporting Companies” enjoy scaled down filing obligations, including less detail required in 10-K and 10-Q disclosure.

The SEC’s Whole Foods reversal

December 1, 2015

It’s been a little over a month, presumably enough time for the dust to settle, since the SEC’s Division of Corporation Finance published its long-anticipated guidance  on requests to exclude shareholder proposals under subsections (i)(7) and (i)(9) of Securities Exchange Act Rule 14-8(a).

The October 22nd staff legal bulletin represents the Division’s response to a controversy from the past proxy season that centered around a No-Action Letter request from grocery retailer Whole Foods, Inc. (not the most likely poster child, by the way, for the rights of corporate boards over shareholders).  Whole Foods sought to exclude a shareholder proposal requesting a right of access for shareholders under Rule 14-8(a)(i)(9) by claiming thereconsider_Flickr proposal conflicted with its own alternative proposal. As J. Robert Brown Jr., Professor at the University of Denver Strum College of Law, details in a recent blog post, after the Division granted Whole Foods’ no-action request, it found itself inundated with requests from companies seeking similar relief, as well as a request for reconsideration by the Whole Foods shareholder. In response, SEC staff withdrew the no-action letter issued to Whole Foods, along with several other no-action letters, and declined to consider no-action requests under subsection (i)(9) during the remainder of the proxy season pending staff review of the rule.

In its legal bulletin, the Division indicated that it will reverse course in its application of Rule 14-8(a)(i)(9) going forward. The Division explained that it will no longer consider a shareholder proposal to be in direct conflict with a management proposal if a reasonable shareholder could logically vote for both proposals. The bulletin provides hypothetical examples of proposals that the Division would no longer consider to be in conflict, noting that although variations may exist between the shareholder and management proposals, “both proposals generally seek a similar objective … and the proposals do not present shareholders with conflicting decisions.” As Professor Brown points out, the guidance attempts to draw a clear line between conflicting proposals and merely alternative proposals, although he also notes that the guidance “leaves open the possibility that companies submitting alternative proposals can obtain exclusion of a shareholder proposal by arguing that the two proposals have sufficiently antagonistic terms, even though seeking the same broad goal.”

The staff bulletin also addresses potential confusion regarding the application of the ordinary business exclusion under Rule 14-8(a)(i)(7) in light of the U.S. Court of Appeals for the Third Circuit’s decision in Trinity Wall Street v. Wal-Mart Stores, Inc. In its opinion, the Third Circuit devised a two-part test to determine whether a shareholder proposal involving a significant policy issue transcends the ordinary business exclusion under the rule, concluding that the significant policy issue cannot involve day-to-day business matters. The bulletin noted that the Third Circuit’s interpretation of subsection (i)(7) departs from the SEC’s application of the rule, which does not make a distinction between a proposal’s significance and its transcendence and allows for a significant policy issue to transcend ordinary business operations even if it involves the daily business concerns. The bulletin indicated that the Division will continue to apply Rule 14-8(a)(i)(7) in keeping with its prior interpretation.

So how has the SEC guidance been received?  Initial reactions have been mixed.  The Wall Street Journal notes that proponents of proxy access including labor unions and pension funds lauded the staff bulletin as a welcome decision in support of shareholder rights, while groups representing CEOs cautioned that the guidance will confuse shareholders and create ambiguity in the results of shareholder votes. Although the implications of the SEC’s guidance will not become clear until proxy season commences, the initial evidence of the effect of alternative proposals on voting results does not reflect ambiguity or inconsistency. According to Professor Brown in a recent blog post, the last proxy season included seven instances where shareholders were presented with alternative proposals submitted by shareholders and management. In six of the seven cases one of the alternative proposals received a clear majority of votes, and in no instances were both proposals adopted. Professor Brown concludes that the initial data rejects the argument that the exclusion of alternative, rather than conflicting, proposals benefits shareholders.

The true test of the SEC’s guidance will, of course, come in a few months as the next proxy season begins and companies submit no-action requests to test the limits of the SEC’s interpretation. And, according to a recent article in Forbes, Whole Foods may once again be at the forefront of the debate, as it has already received a shareholder proposal seeking to revise its proxy access bylaw to allow investors to nominate a quarter of the board of directors, among other things. How public companies will address such shareholder proposals in light of the SEC’s guidance on shareholder proposal exclusions remains to be seen.

New Crowdfunding Rule: A Treat, or a Trick?

November 13, 2015

On October 30, the SEC finally adopted its long-anticipated Regulation Crowdfunding rules — a move that may have been seen as an early Halloween treat by smaller companies looking to raise capital (and investors looking to offer it).  The SEC voted 3-1 to approve equity-based crowdfunding rules, just three years after its original deadline to do so. Republican SEC Commissioner Michael Piwowar voted against the crowdfunding initiative, saying that the new rules were too strict, will discourage many companies from participating, and is overly paternalistic. Piwowar further contended that, by restricting the amount that people can invest, the SEC “cannot trust ordinary Americans … to be able to exercise appropriate judgment in how to spend or invest their resources.”

Under the new rule, small businesses will be allowed to raise up to $1 million per year from the general public through online platforms. Until now, the rules were limited to “accredited investors,” or those with either net worth of at least $1 million or had an annual income of at least $200,000. But now, or at least once the rules go into effect in 2016, just about anybody will be able to invest. In fact, in order to protect smaller investors from, for instance, putting all of their retirement savings into a promising investment that doesn’t pan out, the SEC approved very specific rules to limit how much a non-accredited investor can invest per 12-month period.

A Crowdfunding Website That Foresees the Benefits of the New Rule

Some equity-based crowdfunding platforms open to qualifying investors, such as Crowdfunder and Fundable, had already existed. However, the new rule makes it easier for small businesses and individual investors to participate, possibly even on bigger fundraising sites such as Indiegogo, which has been lobbying for crowdfunding for years and is enthusiastic about the new rule. Slava Rubin, CEO and co-founder of Indiegogo, stated that “[a]ll of us at Indiegogo are excited that the SEC is formally expanding the way in which everyone will be able participate in the entrepreneurial ecosystem through the amazing power of crowdfunding … We’re now exploring how equity crowdfunding may play a role in Indiegogo’s business model.” Rubin continued, “[i]t’s going to benefit a whole lot of companies – it could be the local coffee shop, and there will [be] opportunities for really interesting hardware and tech companies.”

This is the Sort of Thing That the New Crowdfunding Rule Is Seeking to Avoid

Had the new rule been in place years ago, investors in popular crowdfunding platform Kickstarter might have seen a return on their investments. In one example documented by the LA Times, virtual reality headset developer Oculus raised $2.4 million from nearly 10,000 investors on Kickstarter in 2012. After Facebook subsequently bought Oculus for $2 billion, the investors found out that they were never really investing in Oculus but, instead, merely received a “thank you” from the company or an unassembled prototype of the company’s Rift headset.

Initial Doubts

Even as many embraced the new rule, some wondered if it was less a Halloween treat than a trick.  The LA Times reported that many start-ups fail, and the new rule will allow inexperienced investors to invest in firms that have little oversight. Some critics warn this can be a problem, despite the SEC’s assertions that it will supervise the evolving crowdfunding environment. Other critics, including the Huffington Post’s Business Blog, have expressed their own doubts about the new rule, comparing its adoption to what happened during the Great Depression of the 1930s, when the SEC was formed in an effort to regain market stability.

Several crowdfunding websites not only have their doubts about the new rule, but they are also refusing to get on board with it. According to Financial Times, such websites, including Kickstarter, have stated that they will not open up their platforms to enable entrepreneurs  to raise equity following the SEC’s “liberalization.” AngelList, a similar platform that is aimed at more experienced and “accredited” investors, has noted that it will not lower its wealth threshold.

What You Need to Know Now

The SEC rule will go into effect 180 days after they are published in the Federal Register, and portals will be able to register with the SEC on January 29, 2016.

Are you keeping on top of cybersecurity obligations?

October 27, 2015

castle-538722_640In a series of speeches earlier this year, Commodity Futures Trading Commission Chairman Timothy Massad repeated the remark that cybersecurity has become “perhaps the single most important new risk to market integrity and financial stability.” Indeed, with high-profile data breaches seemingly happening more frequently, cybersecurity has become an area of greater emphasis for companies and regulators alike.

How can Lexis® Securities Mosaic® help?

Securities Mosaic allows you to conduct research or stay current on a specific topic like cybersecurity across a broad spectrum of materials from a single gateway.  Below are some examples.


  • In April 2014, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) announced a series of examinations aimed at identifying cybersecurity risks and assessing cybersecurity preparedness in the securities industry. Following up on that initiative, OCIE recently issued a Risk Alert providing information on the areas of focus for the second round of cybersecurity examinations of broker-dealers and investment advisers. These examinations will involve more testing to assess implementation of firm procedures and controls and will focus on governance and risk assessment; access rights and controls; data loss prevention; vendor management; training; and incident response.
  • In Comment Letter review of filings, SEC examiners may ask a company to clarify the technological and administrative procedures it has in place to ensure privacy and security, or to spell out the risks and potential costs of a cyber attack or breach.
  • In the past two years, not just the SEC but the IRS, Federal Reserve Board, EPA, and FDA have offered official guidance or assessment tools in the area of cybersecurity. Find them on Lexis Securities Mosaic by going to our Laws, Rules, Agencies page, searching on “cybersecurity,” and narrowing by the “Guidance” category filter.


  • Risk Factors. Risks disclosed to prospective and current shareholders via periodic reports and in registrations of securities offerings are always a barometer of trending topics.  Recently, it has become common practice for companies that maintain access to sensitive or confidential data to disclose risks of potential data breaches or security concerns.
  • Management’s Discussion & Analysis. When cyber attacks — or even the mere threat of such attacks — impact a company’s bottom line, it will merit discussion in the MD&A section of the annual report.
  • Proxy statements.  Cybersecurity has become a concern at companies’ annual meetings, as companies seek to adopt and refine risk mitigation policies and procedures. The issue can even impact the election of directors and officers, as a candidate’s credentials in the area of cybersecurity may be perceived as increasingly important.


  • Earlier this year, the SEC formalized certain security standards for exchange-listed companies with the adoption of its final rule 34-73639 on Regulation Systems Compliance and Integrity (“SCI”).
  • In August, the National Futures Association submitted to the CFTC a proposed interpretive notice focused on cybersecurity. If approved by the CFTC, NFA members would be required to adopt written procedures to keep customer data secure and safeguard access to members’ electronic systems.


  • In late September, the SEC announced its first enforcement action related to cybersecurity, fining an investment adviser for failing to establish required policies and procedures in advance of a breach that compromised the personally identifiable information (“PII”) of approximately 100,000 individuals, including thousands of the firm’s clients. Without admitting or denying the allegations, R.T. Jones Capital Equities Management consented to the entry of an order finding that it violated Regulation S-P’s PII safeguard rules during a nearly four-year period when it failed to adopt any written policies and procedures to ensure the security and confidentiality of PII and protect it from anticipated threats or unauthorized access. The firm will pay a $75,000 penalty.

News and Commentary

  • Stay well-informed on everything related to securities. Subscribe to our Daily Securities News in your inbox each morning. This comprehensive newsletter includes SEC updates, corporate and securities news stories from an assortment of notable world news sources, recent law firm memos, market regulation updates, pending securities legislation, SEC enforcement and an SEC Final Rules effective date calendar.
  • Check out what the top U.S. law firms are saying. Go to our database of over 100,000 Law Firm Memos and type in relevant keywords (e.g., “cybersecurity,” “data breach”). Set up a daily alert to automatically receive the results of your personalized search in your inbox.
  • See what other influential analysts are saying. Sign up for our SM Blogwatch email, which includes opinion and analysis from well-respected sources such as CorporateCounsel. net and the Harvard Law School Forum on Corporate Governance and Financial Regulation. You can also text-search the past six months of content in our Blogwatch archive.

Real-time alerts for SEDAR Filings is here

October 14, 2015

Alerting capability on the Lexis Securities Mosaic SEDAR Filings search page is now live!  Here are the highlights:

  • Real-time delivery is available; or have your alerts bundled into a once-daily or -weekly digest.


    Photo from Wikipedia; some rights reserved. Click image for attribution.

  • Alerts can be delivered as a “push” to your inbox via email or as a “pull” via RSS; the latter format is broadly compatible with news feeds, readers, aggregators, or your firm’s intranet.
  • Set up alerts via advanced text search, including nested terms and Boolean and proximity operators.
  • You can also construct an alert query to filter by filing type, document type, filing company, and company attributes (industry, exchange, location, issuer size).
  • Add up to 10 additional recipients on any alert.
  • There is no limit to the number of alerts a user may set up.

Feel free to reach out to us with any questions.

Do Your Fall Associates Know an 8-K from a 10-Q?

September 28, 2015

As a new crop of Fall Associates descends upon the nation’s top law firms, it’s a good time to remind our users that proficiency in SEC filings research bears little relationship to the kind of knowledge tested on the Bar Exam. The practical, nuts-and-bolts skills your Associates need to master are best gained by a direct plunge into what mighFilings research 101t appear to be murky, roiling waters.

Of course, there are ways of accelerating the learning process. First and foremost, we highly recommend you take advantage of the free training that is available to your subscriber base as part of your Lexis Securities Mosaic license.  Did you know that we are in better position than ever to train Fall Associates in person in your firm?  If that’s not a possibility, we’re happy to offer training via webinar.  Reach out to your Securities Mosaic Solutions Consultant representative, or visit our training sign-up page at

Second, we offer a variety of “self-teaching” materials on the Securities Mosaic Resource Center.  For example, check out this three-page PDF on the basics of SEC Filings research.


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