Recognizing When Securities Counsel Is Required

When Do You Need an SEC Lawyer?

Companies need an SEC lawyer whenever they raise capital from investors, become SEC reporting companies, face regulatory inquiries, or undertake transactions that involve securities. The cost of not engaging securities counsel at the right time is almost always higher than the cost of engagement.

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Capital Raising

The most common trigger for needing an SEC lawyer is raising capital from investors. Whether the company is conducting a private placement under Regulation D, a Regulation A offering, a crowdfunding offering, or a registered public offering, the sale of securities is subject to federal and state securities laws. An SEC lawyer structures the offering to comply with applicable requirements, prepares the necessary disclosure documents, and ensures that the company preserves its exemption from registration.

Becoming a Reporting Company

Companies that go public or that trigger Exchange Act reporting thresholds become subject to ongoing SEC reporting obligations including Forms 10-K, 10-Q, 8-K, proxy statements, and insider reporting. The transition to reporting company status requires establishing disclosure controls and procedures, internal control over financial reporting, and compliance programs to meet the continuous obligations. An SEC lawyer guides this transition and ensures ongoing compliance with reporting requirements.

SEC Inquiries and Enforcement

If a company receives an inquiry letter, subpoena, or Wells notice from the SEC, it needs specialized securities counsel immediately. The response to an SEC inquiry can determine whether the matter is resolved informally or escalates into a formal enforcement proceeding. Securities counsel with enforcement experience understands how the SEC investigates, what information is being sought, and how to respond in a manner that protects the company's interests.

Frequently Asked Questions

Do I need an SEC lawyer to raise money from investors?

Yes. Any offering of securities, whether through a private placement, Regulation A offering, or registered offering, triggers federal and state securities laws. An SEC lawyer ensures the offering is structured to comply with applicable registration or exemption requirements and that disclosure documents are adequate to satisfy antifraud provisions.

Do I need an SEC lawyer for a Regulation D offering?

Yes. While Regulation D provides exemptions from SEC registration, the conditions of the exemption must be strictly followed. An SEC lawyer structures the offering, prepares or reviews the PPM, ensures proper investor qualification, files Form D, and coordinates state Blue Sky compliance.

Can a general business lawyer handle SEC matters?

SEC matters require specialized knowledge that most general business lawyers do not possess. The federal securities laws are complex, highly technical, and carry severe penalties for noncompliance. Companies that rely on general counsel for SEC matters frequently encounter compliance problems that could have been avoided with specialized securities counsel.