SEC Regulations Governing Securities “Road Shows”

SEC Regulations Governing Securities “Road Shows” Investors interested in securities offerings must be aware of myriad SEC regulations and guidelines surrounding the “road show,” a series of presentations given by company managers to other potential investors, money managers and broker-dealers that might participate in the offering.

In a May 16 post on the Securities Law Blog, attorney Laura Anthony, founding partner of Legal and Compliance LLC in West Palm Beach, outlined and defined the various types of road shows, including SEC-stipulated timing, formats, content, exemptions and follow-on offerings.

“Investors often place a high level of importance on road show meetings and, as such, a well-run road show can make the difference as to the level of success of an offering,” Anthony writes. “A road show is designed to provide these market participants with more information about the issuer and the offering, and to give them a chance to meet and assess management, including their presentation skills and competence in a question-answer setting.”

Traditionally, road shows have been held in multi-city settings over up to two weeks, and they usually involve multiple meetings and presentations. But in the digital age, road shows now can be done by teleconference (live or recorded) or via the sharing of electronic information. Unless it is a non-deal offering, the road show involves an offer of securities – defined as “offer to sell,” “offer for sale” or the broader “offer” represented by “every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value.”

Various SEC regulations govern securities offerings and road shows. Registered road shows must be accompanied by oral offers of their securities, and written offers are allowed only if they comply with Section 10 of the Securities Act - including a requirement that they must be accompanied by a prospectus that meets information requirements before or at the time of the offer.

Among the additional details provided in Anthony’s blog post: · Road Show Definition: Under Rule 433 of the Securities Act, information provided in a road show reflects the same information in the prospectus that is filed with the SEC. A separate “freewriting prospectus” (FWP) includes information that goes beyond what is provided in the prospectus, and is subject to special requirements for form, content and filing requirements under Rule 433. · Road Show Types: The SEC generally classifies road shows as “live” (an “oral offer,” and more freely allowed) or “written” (more strictly regulated. Live offers generally include in-person presentations to an audience or audiences (either through simulcast, webcast, live video conference or live telephone conference). Road shows that are not written, or that do not provide leave-behind printed materials, slides or video clips, are classified as “oral offers.” Road shows represented by FWPs are governed by Rule 405 of the Securities Act, and they generally involve all communications – including electronic media – that can be reduced to writing. · Road Show Content: Typically road shows provide detailed information about the offering, including the reasons behind it and managers’ intended use of proceeds. Typically, offering managers spell out business plans, growth plans, industry trends, competitors and market potential for their products and services. Except in live presentations, a question-answer session also is a key component of a road show. Content is usually prepared collaboratively among the company, underwriters and legal counsel, and the process usually begins at the same time as the registration statement is drafted. · Timing: Road shows typically are completed in the last few weeks before a registration statement becomes effective or before a Regulation A offering circulate is qualified. Section 5© prohibits offers before the registration statement is filed. For practical purposes, a Regulation A road show commences just before an SEC qualification. A private offering road show commences after

documents are completed. Emerging Growth Company documents must be filed at least 15 days before the road show starts.

Regulation FD requires companies that are subject to SEC reporting requirements must make material information fully accessible to the public. The same regulation, and other stipulations, also applies to road shows that are conducted for follow-on offerings.

For more information, contact attorney Laura Anthony, founding partner of Legal & Compliance, LLC, a national corporate and securities law firm, at 1-800-341-2684 or visit www.LegalandCompliance.com and www.LawCast.com.