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Dissecting the New Section 4(a)(7)

President Obama signed into law the Fixing America’s Surface Transportation Act (the “FAST Act”) on December 4, 2015 to address the nation’s infrastructure challenges. However, the FAST Act also made notable changes to the Securities Act of 1933 (the “Securities Act”), including by adding a new statutory exemption – Section 4(a)(7) – which permits private resales of restricted securities under certain circumstances.

The new Section 4(a)(7) feels a lot like the uncodified “Section 4(a)(1½)”, which practitioners have relied upon for resales of securities by any person other than the issuer, underwriter or dealer. However, the new Section 4(a)(7) includes a few significant distinctions, including issuer information requirements and elimination of most holding periods.

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Samuel Asher Effron assists Mintz clients with venture capital and private equity transactions, helping start-ups with legal and business matters. He has clients in a variety of technology sectors, including video gaming, music, virtual and augmented reality, and consumer electronics.