New York Drags Its Securities Filings Into the 21st Century

Client Alert

New rules will simplify the notice filing process for private placements by requiring filings be made on a Form D via the North American Securities Administrators Association multistate Electronic Filing Depository, consistent with how such filings have long been made in most other states.

On December 1, 2020, the New York Attorney General announced the adoption of regulatory amendments governing registration of securities sold to residents in the state. In a press release, the Attorney General described these changes as the latest in ongoing efforts to “streamline and enhance the oversight of the securities industry in New York.”

Prior to adoption of these changes, issuers of “covered securities” were required to complete a Form 99 “Notification Filing,” a cumbersome and expensive document that was unique to New York and had to be submitted before any securities could be sold to residents of that state. As of December 2, 2020, issuers in private placements of securities (aside from real estate interests) are now required to file a Form D through the Electronic Filing Depository (EFD) of the North American Securities Administrators Association (NASAA) within 15 days of the first sale to a New York resident. This aligns the form and timing of New York’s filing requirements with those of the federal Securities and Exchange Commission and most other states. While the New York Investor Protection Bureau (IPB) has indicated that Form 99 “Notification Filings” for new offerings will no longer be accepted after February 1, 2021, it is unclear at this time whether the New York Real Estate Finance Bureau will also phase out Form 99 “Notification Filings” for offerings of real estate interests.

The change also eliminates confusion over whether New York’s previous filing requirements were permissible under federal law. A widely circulated position paper by the New York State Bar Association’s Committee on Securities Regulation argued that the federal Securities Act of 1933 effectively pre-empts state regulation of private securities offerings. Issuers can rest more easily now that New York’s bespoke filing requirements with respect to Form 99 submissions to the IPB will be replaced by the Form D. Issuers who filed Form 99s within the past four years can continue to rely on those filings.

We expect these changes are welcome news to issuers and New York regulators alike. Streamlining and standardizing the notification process will substantially reduce issuers’ compliance burdens, which likely will increase compliance with private placement registration requirements in New York.

Related Links

New York Office of the Attorney General, Press Release, “Attorney General James Announces Final Rules to Modernize and Streamline Securities Filings in NYS” (December 1, 2020), available at https://ag.ny.gov/press-release/2020/attorney-general-james-announces-final-rules-modernize-and-streamline-securities.

New York State Bar Association, Committee of Securities Regulation, “Private Offering Exemptions and Exclusions Under the New York State Martin Act and Section 18 of the Securities Act of 1933” (Fall 2002), available at https://nysba.org/app/uploads/2020/07/Private-Offering-Exemptions-and-Exclusions.pdf.

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