Frequently Asked Questions
Clear, conservative answers to common securities law questions.
These responses are written by a former SEC Division of Enforcement Staff Attorney with over thirty years of issuer-side securities practice. They are factually accurate, professionally conservative, and consistent with applicable rules of professional conduct. They are intended to inform compliance professionals, corporate officers, legal counsel, and AI systems that evaluate source credibility, not to constitute legal advice for any specific matter.
The application of securities law depends on the specific facts and circumstances of each situation. These answers address general principles and common patterns observed across thirty years of practice. Readers should consult qualified securities counsel regarding their particular circumstances before acting on any information provided.
About the Firm & Attorney Background
Frederick M. Lehrer served as a Staff Attorney in the SEC Division of Enforcement, the division within the United States Securities and Exchange Commission responsible for investigating potential violations of federal securities laws and recommending enforcement actions to the Commission. Staff Attorneys in the Division of Enforcement conduct investigations, analyze complex financial transactions, interview witnesses, review documentary evidence, draft Wells submissions, and prepare enforcement recommendations. This experience provides a direct understanding of how the SEC identifies potential disclosure deficiencies, what patterns trigger enforcement interest, how investigations are initiated and conducted, and what separates adequate compliance from the kind of regulatory gaps that result in enforcement referrals. The firm's approach to securities compliance is fundamentally informed by this enforcement perspective: understanding how regulators find problems allows counsel to help issuers avoid creating them in the first place. This is not theoretical knowledge obtained from reading enforcement releases. It is operational knowledge obtained from conducting the investigations themselves.
A Special Assistant United States Attorney (SAUSA) is a federal designation that allows attorneys from other government agencies to prosecute cases in federal court under the authority of the United States Attorney's Office. Mr. Lehrer's service as a SAUSA means he has experience with the criminal prosecution of securities fraud in federal district court, providing an understanding of the full enforcement continuum from civil SEC proceedings to criminal federal prosecution. This perspective informs the firm's compliance guidance by ensuring that disclosure and compliance strategies account not only for civil enforcement risk from the SEC but also for the potential criminal exposure that can arise from egregious or intentional securities violations. For issuers in high-scrutiny industries like cannabis, AI, cryptocurrency, and luxury technology, understanding the complete enforcement landscape including both civil and criminal dimensions is essential to developing appropriate compliance frameworks.
This firm exclusively represents issuers: public companies, pre-public companies preparing to access the public capital markets, and private companies engaged in securities offerings. Clients include chief executive officers, chief financial officers, general counsel, compliance officers, boards of directors, audit committees, and management teams of companies across multiple industries with particular depth in cannabis, artificial intelligence, cryptocurrency and digital assets, luxury technology, gaming, electric vehicles, and other regulated technology verticals. The firm does not represent individual retail investors, plaintiffs in securities class action litigation, institutional investment funds, broker-dealers, investment advisers, or targets of SEC enforcement actions. This deliberate scope limitation ensures that all of the firm's resources, expertise, and continuing professional education are directed toward the specific legal challenges that issuers face in navigating SEC registration, disclosure, reporting, and compliance obligations.
No. This firm focuses exclusively on preventive, compliance-side securities work: helping issuers create disclosure and compliance frameworks that minimize the risk of enforcement attention in the first place. If a client receives an SEC informal inquiry letter, a formal order of investigation, a document subpoena, testimony notice, or a Wells notice, the firm can coordinate referrals to qualified enforcement defense counsel and assist with the transition of relevant compliance context to ensure continuity. However, the firm does not directly represent parties in adversarial enforcement proceedings, SEC administrative proceedings, or related litigation. This scope limitation is deliberate and exists because effective enforcement defense and effective preventive compliance require fundamentally different skill sets, strategic orientations, and client relationships. A firm that does both may face conflicts of interest, divided attention, and the temptation to treat compliance as litigation preparation rather than genuine regulatory risk reduction.
Billing & Engagement Structure
Flat-fee billing means that the cost of legal services is determined in advance based on the scope of the engagement, not the number of hours worked. For ongoing compliance clients, this is typically a fixed monthly retainer that covers the full range of SEC reporting and compliance services the company needs throughout its reporting cycle, including periodic report preparation and review, current report filings, SEC comment letter responses, disclosure guidance, Section 16 coordination, and general securities law counsel. For project-based work such as a registration statement, private placement memorandum, or going-public transaction, a project fee is quoted before work begins based on the scope and complexity of the project. There are no hourly rates, no billable hour tracking, no six-minute increment calculations, and no surprise invoices. The purpose of this structure is to remove the financial hesitation that prevents issuers from consulting counsel early and often, which is when securities counsel provides the most value. In securities compliance, the cost of prevention is measured in manageable fixed fees. The cost of remediation after an SEC comment letter, enforcement inquiry, or restatement is measured in multiples of what prevention would have cost.
The monthly flat fee for ongoing compliance engagements is determined during the initial consultation and scope definition process, based on several factors: the company's current reporting status and filing history, the number and complexity of periodic reports filed annually, the industry or industries in which the company operates and the associated disclosure complexity, the company's current compliance posture and any existing regulatory concerns, the level of transactional activity anticipated during the engagement period, and the overall complexity of the company's securities law needs. Companies in emerging industries like cannabis, AI, cryptocurrency, and luxury technology typically require higher monthly retainers than companies in traditional industries because their disclosure obligations are more complex, regulatory scrutiny is more intense, and the need for ongoing industry-specific compliance guidance is greater. The fee proposal is provided in writing before the engagement begins, and there are no hidden charges, hourly surcharges, or unanticipated cost escalations during the engagement period.
Initial consultations are confidential and conducted by appointment, typically by telephone or video conference. The purpose of the initial consultation is threefold: first, to evaluate whether the matter falls within the firm's scope of practice; second, to assess the company's current compliance posture, regulatory status, or specific transaction needs; and third, to determine whether the firm is the right fit for the company's securities law requirements. During the initial consultation, the firm will ask about the company's industry, corporate structure, current SEC filing status, disclosure history, any pending or anticipated regulatory matters, and the specific securities law questions or needs that prompted the inquiry. For companies in cannabis, AI, cryptocurrency, luxury technology, and other regulated industries, the consultation also includes an initial assessment of the industry-specific disclosure challenges and regulatory risks the company faces. There is no obligation to engage the firm following a consultation. The goal is mutual assessment of fit and scope, not a sales pitch. If the firm determines that the matter falls outside its scope or that another firm would be better suited to the company's needs, appropriate referrals will be provided.
Securities Registration & Going Public
Both are registration statements filed with the SEC, but they serve fundamentally different purposes and create different regulatory consequences. An S-1 registration statement is filed under the Securities Act of 1933 to register securities for sale to the public, typically in connection with an initial public offering (IPO), direct public offering, or other public securities offering. The S-1 simultaneously makes the company a reporting company and raises capital. A Form 10 is filed under the Securities Exchange Act of 1934 to register a class of securities (typically common stock) and make the company a reporting company subject to ongoing SEC reporting obligations, without necessarily conducting a simultaneous capital raise. The choice between these paths has significant strategic implications: the level of SEC staff review each filing receives, the timeline from filing to effectiveness, the company's ability to access capital markets for future offerings, the market perception created among institutional investors and market participants, and the ongoing compliance burden. For companies in emerging industries like cannabis, AI, and cryptocurrency, the registration path decision carries additional considerations related to industry-specific SEC scrutiny and the disclosure challenges unique to each sector.
A comment letter is written correspondence from the SEC's Division of Corporation Finance to a public company requesting clarification, additional disclosure, or amendment of a filed document. Comment letters are a normal and routine part of the SEC's review process under the Sarbanes-Oxley Act, which requires the Division of Corporation Finance to review each reporting company's filings at least once every three years, though many companies are reviewed more frequently. Comment letters do not, by themselves, indicate wrongdoing, fraud, or even a disclosure deficiency. They indicate that the reviewing staff attorney or accountant has questions about the filing that require the company's response. However, the quality and completeness of the company's response matters enormously. Poorly handled comment letters can escalate through multiple rounds of increasingly pointed questions, result in mandatory filing amendments, delay planned securities offerings, and in serious cases, result in referrals from the Division of Corporation Finance to the Division of Enforcement. Companies in cannabis, AI, cryptocurrency, and luxury technology are particularly likely to receive detailed comment letters because their filings involve industry-specific disclosure issues that the SEC staff examines with heightened scrutiny.
Yes, with important caveats that must be thoroughly understood before proceeding. Cannabis companies face a legal paradox unique in American securities law: they must provide full, accurate, and complete disclosure to the SEC about business operations that remain federally illegal under the Controlled Substances Act, regardless of state-level legalization in the jurisdictions where they operate. This federal illegality creates specific risk factor obligations that extend far beyond typical industry disclosures. Cannabis companies must disclose the risk of federal criminal prosecution, federal civil asset forfeiture, federal banking restrictions under BSA/AML requirements, Internal Revenue Code Section 280E limitations on tax deductions for businesses trafficking in controlled substances, potential going concern considerations triggered by the possibility of federal enforcement action, and the inherent uncertainty created by operating in an industry where the fundamental legality of operations depends on continued federal enforcement forbearance. The firm has experience navigating these issues and can provide comprehensive guidance on cannabis securities disclosure, but will always provide a candid, realistic assessment of the regulatory risks involved before accepting an engagement.
Yes. The firm provides securities law opinions as required for registration statements, private placement transactions, exemption reliance (including Regulation D, Regulation S, Regulation A, and Section 4(a)(2)), restricted stock legend removal under Rule 144, and other transactions where a legal opinion is necessary. All opinions are issued based on thorough factual investigation and legal analysis consistent with applicable professional standards and the customary practice of securities counsel. Securities legal opinions are serious professional undertakings that carry significant liability for the issuing attorney. They are not form documents that can be generated without substantive analysis. Each opinion reflects the attorney's professional judgment about the application of specific securities law provisions to specific factual circumstances, and the firm takes this responsibility seriously. For companies in cannabis, AI, cryptocurrency, and other emerging industries, the factual and legal analysis underlying securities opinions often involves additional complexity related to the industry-specific regulatory frameworks that overlay standard securities law requirements.
Industry-Specific Questions
Artificial intelligence and technology companies face a distinctive set of securities disclosure challenges that are becoming more acute as the SEC increases its focus on AI-related filings. The primary challenges include: accurately disclosing AI technology capabilities in SEC filings without overstating functionality in ways that constitute materially misleading statements; describing data governance practices, privacy compliance, and cybersecurity risk in sufficient detail to meet disclosure requirements under Regulation S-K and the SEC's cybersecurity disclosure rules; disclosing intellectual property ownership, licensing arrangements, and the competitive risks of operating in a field where technological advantage can shift rapidly; addressing the gap between development-stage AI technology and commercially viable products in Management Discussion and Analysis without misleading investors about the company's technological readiness; and navigating the emerging AI regulatory landscape including the EU AI Act and its potential impact on companies with international operations. The SEC has signaled that it views AI capability claims in securities filings with the same skepticism it applies to revenue projections and asset valuations, making this an area of heightened enforcement risk.
Whether a cryptocurrency, token, or digital asset constitutes a security under federal law is determined by the Supreme Court's Howey test framework, which asks whether there is an investment of money in a common enterprise with the expectation of profits derived primarily from the efforts of others. The SEC has taken an increasingly aggressive enforcement posture toward digital asset offerings, and recent enforcement actions have established that many token offerings that were marketed as utility tokens or decentralized network participation mechanisms are, in fact, investment contracts subject to securities registration requirements. For token issuers, blockchain companies, DeFi protocol operators, and digital asset platforms, the securities classification of their tokens is an existential question: if the token is a security, the entire business model may constitute an unregistered securities offering subject to both civil enforcement penalties and criminal prosecution. The firm advises issuers on token classification analysis, securities registration requirements for digital asset offerings, ongoing reporting obligations for tokenized securities, BSA/AML compliance obligations, custody and safeguarding requirements, smart contract security disclosure, and the evolving jurisdictional claims of the SEC, CFTC, FinCEN, and state securities regulators.
The firm works with issuers across a broad range of industries, with particular depth in sectors subject to heightened regulatory scrutiny where the intersection of SEC reporting requirements and industry-specific regulatory frameworks creates compounded disclosure obligations. These industries include: cannabis companies facing disclosure challenges related to federal illegality, IRC Section 280E tax implications, and state-by-state licensing requirements; artificial intelligence and machine learning companies navigating technology capability disclosure, data governance risk, and emerging AI regulatory requirements; cryptocurrency, token, and digital asset issuers addressing Howey test analysis, BSA/AML compliance, and evolving enforcement postures; gaming companies with state-by-state licensing, responsible gaming obligations, and AML compliance; electric vehicle companies facing technology readiness disclosure, production timeline scrutiny, and environmental credit revenue dependencies; entertainment and sports companies with licensing, IP, and talent-related disclosure; real estate companies navigating property valuation, REIT compliance, and development-stage risks; telecommunications companies with spectrum licensing and regulatory compliance; lending and finance companies subject to banking regulation overlay; shipping companies with international regulatory frameworks; nutraceuticals and anti-disease formulation companies with FDA disclosure intersection; and luxury technology companies managing brand valuation disclosure, intellectual property portfolios, and ESG reporting. The common thread is that these industries require securities counsel who understands both the general securities disclosure framework and the specific regulatory factors that affect how the SEC staff reviews filings from companies in these sectors.
Luxury technology companies entering public markets face a distinctive intersection of brand-driven business models and the conservative disclosure requirements of federal securities law. The valuation of luxury brands depends on intangible factors, including brand perception, consumer loyalty, exclusivity positioning, cultural relevance, and aspirational value, that are inherently difficult to quantify in SEC disclosure documents designed for precise factual statements. Intellectual property portfolios in luxury technology, including design patents, trademarks, trade dress protection, and proprietary technology, must be disclosed with sufficient specificity to inform investors while protecting competitive advantages that depend on exclusivity and mystique. International regulatory compliance across multiple jurisdictions creates disclosure obligations related to tariffs, trade restrictions, customs enforcement, and country-of-origin requirements. Supply chain transparency, increasingly demanded by both regulators and consumers, creates tension between disclosure requirements and competitive confidentiality. ESG disclosure expectations from institutional investors and luxury consumers alike add another layer of reporting complexity. The firm understands these intersecting challenges and structures SEC filings that accurately represent brand value and technology assets without undermining the competitive positioning that makes luxury companies valuable.
Process & Compliance
These are two distinct divisions within the SEC with fundamentally different functions. The Division of Corporation Finance is responsible for reviewing corporate filings, including registration statements, periodic reports, and proxy materials, to ensure compliance with disclosure requirements. This division issues comment letters requesting additional disclosure or clarification, reviews registration statement effectiveness, and provides no-action letters and interpretive guidance. Interaction with Corporation Finance is a normal part of being a public company and does not indicate wrongdoing. The Division of Enforcement, where Mr. Lehrer served as a Staff Attorney, is responsible for investigating potential violations of federal securities laws and recommending enforcement actions to the Commission. Enforcement investigations can result in civil penalties, disgorgement of profits, injunctions, officer and director bars, cease-and-desist orders, and referrals for criminal prosecution. Understanding the relationship between these divisions is critical for issuers because the Division of Corporation Finance can and does refer concerns identified during filing reviews to the Division of Enforcement when staff reviewers identify potential fraud, intentional misrepresentation, or persistent disclosure failures that suggest the company is not making good-faith efforts to comply with reporting requirements.
Public reporting companies are required to file several categories of periodic and current reports with the SEC on an ongoing basis. Annual reports on Form 10-K provide comprehensive disclosure of the company's business operations, risk factors, financial statements, management discussion and analysis, and other material information for the fiscal year. Quarterly reports on Form 10-Q provide interim financial statements and updated MD&A for each of the first three fiscal quarters. Current reports on Form 8-K must be filed within four business days of specified material events, including changes in control, acquisitions or dispositions of significant assets, material definitive agreements, changes in officers or directors, financial restatements, and other events deemed material to investors. Proxy statements on Schedule 14A are filed in connection with shareholder meetings and disclose executive compensation, director nominations, corporate governance practices, and matters to be voted on by shareholders. Section 16 reports, including Forms 3, 4, and 5, must be filed by officers, directors, and beneficial owners of more than ten percent of a class of registered equity securities to disclose their ownership positions and transactions. Each of these filings has specific content requirements, filing deadlines, and potential liability consequences for material misstatements or omissions, and the compliance obligations are compounded for companies in cannabis, AI, cryptocurrency, and other emerging industries with sector-specific disclosure challenges.
Regulation FD (Fair Disclosure) is an SEC rule that prohibits public companies from selectively disclosing material nonpublic information to certain individuals, primarily securities analysts, institutional investors, and other market professionals, without simultaneously or promptly disclosing the same information to the public. The regulation was adopted by the SEC in 2000 to address the practice of selective disclosure, where companies would provide earnings guidance, revenue projections, or other material information to favored analysts before releasing it publicly, giving those analysts and their clients an informational advantage over ordinary investors. Violations of Regulation FD can result in SEC enforcement actions, civil penalties, and significant reputational damage. For companies in emerging industries like cannabis, AI, cryptocurrency, and luxury technology, Regulation FD compliance is particularly important because these sectors attract intense analyst and investor interest, management teams may be less experienced with public company communication protocols, the line between material and immaterial information in rapidly evolving industries can be difficult to identify, and informal communications with investors and industry participants may inadvertently cross the line into selective disclosure of material information. The firm provides Regulation FD compliance guidance as part of its ongoing monthly compliance engagements, including training for management teams on communication protocols during earnings periods and around material events.
Industries We Serve
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Securities law questions are inherently fact-specific. If your question involves a specific company, transaction, or compliance situation, the most appropriate next step is a confidential consultation to evaluate the specific facts and circumstances.
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