Reg A+ and Form 5110 Help

Involved with Reg A offerings? Then as you likely know, just filing with the SEC is not enough. “In addition to the requirements (of state filing fees), most states (also) require the agents of issuers in Regulation A offerings to register (as securities dealers), and many also require agents to pass certain securities examination(s), such as the Series 7, Series 63 and/or the Series 66.”

So yes, you have to file a Form 1A with the SEC to conduct a Reg A offering…
=> And you have to file and pay fees for every state you will be offering securities in;
=> And you have to register as a securities dealer in every state you sell securities in, or, alternatively, execute the sale of those securities through someone who is registered;
=> This means besides your SEC 1A, you also need to file a Form 5110 with FINRA.

The easiest way to legally conduct an offering in US states is to have a broker-dealer execute your transactions (and performing KYC, AML and other required activities). It’s either that or get registered yourself in every state, which is not really something you should be doing given that you need to focus on running your business and not changing careers to become a securities broker.

Good news – our legal team of Scott Andersen & George Georgiades have experience in getting this done and can work with issuers counsel to file your 5110. In fact, they have gotten the industry’s first two 5110’s in the new Reg A+ era approved so those offerings could go live! We now have quite a bit of boilerplate documents which make the process as easy and inexpensive as possible.

Tips:
* don’t wait until your 1A is approved by the SEC before filing your 5110 with FINRA, as it will just add 30 – 45 days to your already long-awaited launch. File it at the same time as your 1A.
* don’t think you can conduct your offering without using a broker-dealer. You can’t. There are 51 mini SEC’s in this country and they need to be respected. Nothing pleasant will come from conducting an offering & selling securities directly and then later having a state regulator come knocking on your door.
* do (yes, “do”) engage in general marketing and soliciting your offering! You can do this directly. If you aren’t using a broker-dealer to solicit then you will save on sales commissions, even though you will still pay for transaction execution and compliance services (and, of course, if you are asking a broker to advise you in your offering and/or to find investors then you should expect to pay them for that work).

The team at FundAmerica helps issuers, broker-dealers, investment advisers and ad-platforms every day with technology, compliance and back-office services. All in an easy to use FinTech package. Reach out to us anytime with questions and for help with any back-office aspect of your Reg A+ offering, including working with your attorney to file your Form 5110!

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• FINRA - Financial Industry Regulatory Authority
• UNITED STATES SECURITIES AND EXCHANGE COMMISSION
• Scott Purcell