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The Forum For US Securities Lawyers In London IN REVIEW A DECADE 2006-2016Before the Forum . . . U.S. legal know-how on many important issues affecting non-U.S. clients was very scattered. U.S. securities laws has always been a complicated black box area where potential issues lie dormant. The Forum’s hard work has begun to bring these issues to the forefront so that they may be discussed and addressed in a meaningful and coherent way. - Lawyer from a major investment bank in London Daniel Winterfeldt Partner, Reed Smith LLP Founder and Co-Chair of the Forum Edward Bibko Head of EMEA Capital Mar- kets, Baker & McKenzie LLP Co-Chair of the Forum The Forum for US Securities Lawyers in London (the “Forum”) is proud to present its Decade-in-Review, which sets forth the Forum’s activities since its inception in 2006. During this time, the Forum has spearheaded several successful initiatives, including: • periodic roundtables and discussions on changes in law and market practice; • submitting numerous comment letters to the SEC on proposals and rule changes affecting the London and international capital markets; • distributing regular U.S. securities updates, digests and other informational emails; • meeting annually with the Securities and Ex- change Commission in Washington, DC (the “SEC”); • publishing the International Capital Markets Glossary; and • coordinating the implementation of electronic settlement of Regulation S, Category 3 securi- ties trading on the London Stock Exchange. The Forum’s creation in 2006 was inspired by the need to solve the problem of paper settlement of U.S. Regulation S, Category 3 securities, which makes this last accomplishment in 2015 particular- ly notable. We look forward to the next decade of exciting projects. This year, we are hosting a series of roundtables focusing on: (i) a draft comment letter regarding the SEC’s recent review of the Accred- ited Investor definition; (ii) proposing changes to Regulation S, Category 3, with the aim of submit- ting the proposed changes to the SEC; and (iii) up- dating the International Capital Markets Glossary. Best regards,• “private offering reform’” ( September 4, 2007 and October 8, 2007 ), which addressed the proposed changes to Regulation D and Rules 144 and 145. “Private offering reform” was a significant event in 2007 and early 2008 with the SEC releasing a series of rule proposals and adopting new rules aimed at facilitating access to U.S. capital markets for small issuers and international companies. The SEC cited the Forum’s comment letter twice in its final rule adopting the amendments to Rule 144; • the SEC’s proposed amendments to Rule 12g3-2(b) ( April 25, 2008 ), an exemption from reporting requirements under the U.S. Secu- rities Exchange Act of 1934 (the “Exchange Act”) available to foreign private issuers. The comment letter generally supported the SEC’s attempt to modernize the exemption regime under Section 12(g); • the SEC proposed amendments to the rules on Cross-Border Tender and Exchange Offers, Business Combinations and Rights Offerings (the “Cross-Border Tender Offer Rules”) ( June 23, 2008 ) which, among other areas, supported raising the Tier 1 exemption threshold to 15%. The SEC again cited the Forum’s comment letter in its final rule; • Rule 15a-6 (September 8, 2008) regarding the SEC proposals on exemptions for foreign broker-dealers. The Forum generally sup- ported the SEC’s recommendations in these proposals, including expanding the scope of activities that a foreign broker-dealer could conduct in the United States without the need for registration, simplifying procedures and the increasing direct access and interaction with U.S. investors; and • the rules required to be adopted by the SEC pursuant to the Jumpstart Our Business Start-ups Act of 2012 (the “JOBS Act”) ( June 29, 2012 and October 5, 2012 ). The comment letters addressed issues affecting the Lon- don and international markets including the effects of lifting the ban on general solicitation and general advertising and the interaction of these provisions with Regulation S as well as certain aspects of Regulation D and Rule 144A offerings. In addition, the comment letters included some novel points not raised in other comment letters including requests for confirmation: 1. of any effect the Section 201 changes to general solicitation and general advertis- ing would have on the permitted activities of unregistered foreign broker dealers under Rule 15a-6 under the Exchange Act; 2. that the use of general solicitation and general advertising in connection with a Rule 506 or Rule 144A offering would not impact an issuer’s ability to take advan- tage of an exemption or exception under the Investment Company Act of 1940 (the “Investment Company Act”). The Forum’s comment letter was cited four times in the final rule. SEC Comment Letters Throughout the past decade, the Forum has submitted several comment letters to the SEC on topics af- fecting the London and international capital markets. The SEC has considered and often referenced the Forum’s comments in their final rulemaking. The Forum is pleased to have been able to contribute to the rulemaking process and to have had a positive impact on U.S. securities issues that affect the London markets. The SEC’s references to the Forum’s comment letter(s) include those relating to: 2007Regulation S, Category 3 Year Two Project (the “Year Two Project”) - 2007 The Year Two Project addressed the treatment of non-affiliate Regulation S, Category 3 securities and sought to establish a set of guidelines to ena- ble such securities to be electronically traded and settled offshore following the one-year distribution compliance period. In August 2007, after consult- ing lawyers practicing U.S. securities law in Lon- don and relevant market participants, the Forum finalized the Year Two Project and published a set of proposed model procedures for the treatment of such securities. The model procedures presented a framework to guide companies through the implementation of uncertificated settlement in conjunction with ad- vice from their U.S. legal counsel and other advis- ers as to overall compliance with the requirements of U.S. securities laws, including Regulation S. Regulation S, Category 3 Year One Project (the “ Year One Project ”) – 2007 Following the success of the Year Two Project, the Forum launched the Year One Project relating to the offshore electronic trading and settlement dur- ing the one-year distribution compliance period of non-affiliate Regulation S, Category 3 securities. After a drafting phase for the Year One Project in the second half of 2007, the public consultation period was launched; the launch event was held in the Theatre at the London Stock Exchange and was widely attended by representatives from law firms and market participants, including NOMADs, registrars and financial institutions. The proposed guidelines were developed by the Forum and were informed by a dialogue with Forum members and market participants, market practice, a review of SEC no-action letters and applicable law and regulations. The London Stock Exchange and Eu- roclear UK and Ireland Limited (“EUI”, as the owner and operator of CREST), also began developing a trading and settlement platform to be used during the one-year distribution compliance period for Regulation S, Category 3 securities and began seeking consultation with the SEC. The Year One Project and Forum meetings were a useful addi- tion to this larger ongoing dialogue. “We are delighted that a solution has been found for the electronic settlement of US Regulation S, Category 3 securities in London. This issue has caused concern to institutional investors and corporates for some time and it has been through the hard work and perseverance of many parties, particularly the Forum team, that a clear structure is now being put in place to allow for the electronic settlement of these securities to occur.” — Director, NOMAD2008 The Forum launched its website (tffuslil.com) in 2008 which contains legal updates and copies of the Forum’s comment letters as well as other project documentation .2009 The Forum was shortlisted for the Law Firm Innovation Award by the British Legal Awards in October 2009, which recognized the Forum as an innovative, collaborative platform for dealing with the application of and compliance with U.S. securities issues in the London capital markets. As part of the Forum’s “SEC Speaker Series,” the Forum hosted a conversation in 2009 with Associate Director of the Division of Corporation Finance, Mauri Osheroff, on the SEC’s amendments to the Cross-Border Tender Offer Rules.Investment Company Act Section 3(c)(7) Model Procedure 2012 Among numerous publications, the Forum published a note in 2009 elaborating upon the proposed U.S. federal legislation that would repeal the existing TEFRA D Eurobond exemption. The Forum created the Investment Company Act Section 3(c)(7) sub-group in 2009 and, through- out that year, held several meetings to discuss issues relating to offerings by companies that rely on the exemption provided by Section 3(c)(7) under the Investment Company Act (the “3(c)(7) exemption”). Unlike for debt issuers, there was no established market practice for compliance with the Section 3(c)(7) exemption for non-U.S. equity issuers; this project aimed to establish model procedures to ensure compliance with Section 3(c)(7) for such securities. The sub-group included market participants (including financial institutions), lawyers and other practitioners in the market and worked to develop and launch the Investment Company Act Section 3(c)(7) Model Procedures for Equity Issuances in the London Capital Markets (the “3(c)(7) Model Procedures”) in 2012. The 3(c)(7) Model Proce- dures include a menu of procedures and consider- ations to be used by issuers in the London market taking advantage of the 3(c)(7) exemption for equity securities. In addition, the Forum conducted a PLI one-hour Briefing on the 3(c)(7) Model Procedures. The 3(c)(7) Model Procedures are only appropri- ate for non-U.S. issuers and can be found here. http://tffuslil.com/portfolio/investment-compa- ny-act-section-3c7-model-procedures-for-equi- ty-issuances-in-the-london-capital-marketsIn response to the elimination of the ban on gener- al solicitation and general advertisements in Rule 144A offerings and certain Regulation D offerings mandated by the JOBS Act amendments (July 10, 2013), the Forum held a roundtable on August 14, 2013 and a subsequent PLI Briefing on Septem- ber 19, 2013 entitled “The International Impli- cations of the Recent JOBS Act Amendments”. Led by Daniel Winterfeldt and Edward Bibko, along with panellists from Bank of America Merrill Lynch and Deutsche Bank, the PLI briefing, among other topics, discussed the interplay between amended Rule 144A and new Rule 506(c), on the one hand, and Regulation S, on the other, in concurrent U.S. private placement/Regulation S offerings. Elimination of the Ban on General Solicitation and General Advertising 2013 As a follow-on, in June 2014, the Forum along with Goldman Sachs conducted another PLI brief- ing discussing the international market and the JOBS Act amendments eliminating the prohibi- tion on general solicitation and general advertising under new Rule 506(c) of Regulation D and Rule 144A. Both briefings were attended by nearly 100 participants, including U.S. regulators, financial institutions and capital markets lawyers.Next >