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New York Guidance on Mandatory Filing of Form D

On December 1, 2020, New York Attorney General Letitia James issued guidance regarding, among other things, securities issued to New York residents in private placements made pursuant to Regulation D, Rule 506 under the Securities Act of 1933. The guidance comes after years of uncertainty about whether and how companies issuing securities to New York residents in private placements should or were required to comply with the Martin Act, which is New York’s “blue sky” statute governing securities issuances within the state. 

Pursuant to the guidance, issuers selling “covered securities” (i.e., securities issued pursuant to a private placement exemption under Regulation D, Rule 506) must now file a completed Form D through the Electronic Filing Depository of the North American Association of Securities Administrators. Previously, it was the position of many law firms, including Mintz, as well as the New York State Bar Association (NYSBA), that compliance with the Martin Act’s onerous filing requirements, including the filing of a Form 99, was prohibited by the National Securities Markets Improvement Act, constituting an impermissible regulatory regime running parallel to the Securities Act. Further, many New York practitioners, including the authors of the NYSBA paper, have taken the position that because Rule 506 offerings are private, and the Martin Act, on its own terms, only regulates offerings of securities “to the public,” that the Martin Act can impose no requirements, regardless of preemption, including notice or Form D filing requirements.

The days of uncertainty are over. The new guidance makes it clear: if you offer securities in a private placement to New York residents relying on Regulation D, Rule 506, then you must file the Form D in New York.

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Samuel Asher Effron

Member / Co-chair, Venture Capital & Emerging Companies Practice

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.