SEC Staff Issues New C&DI On Integration Analysis Of Successive Offerings Made Under Different Provisions Of Regulation D


On November 17, 2016, the Staff of the Division of Corporation Finance of the U.S. Securities and Exchange Commission (SEC) issued new guidance, in the form of Compliance and Disclosure Interpretation (C&DI) Question 256.34, which expands the integration analysis of successive offerings under Regulation D (Reg. D).


Per Rule 502(a) of Reg. D, offers and sales of securities made more than six-months before or after a Reg. D offering of similar securities will not be considered part of (i.e., "integrated" with) that Reg. D offering. If an issuer offers or sells securities within this six month window, (i.e., during the time period for which the non-integration safe harbor is unavailable), the determination as to whether separate sales of securities are considered integrated depends on the particular facts and circumstances. The note to Rule 502(a) lists five factors that should be considered in determining whether offers and sales should be integrated for purposes of the exemptions under Reg. D.

New Guidance

In C&DI 256.34, the Staff states that the integration factors listed in the note to Rule 502(a) are not the sole means by which an issuer should determine whether successive Reg. D offers and sales constitute a single offering. In broadening the integration analysis under Reg. D, the Staff relies on Rule 152 of the Securities Act of 1933, as amended (the Securities Act), which states that transactions by an issuer not involving any public offering (as contemplated by the registration exemption in Section 4(a)(2) of the Securities Act) shall continue to be deemed private transactions, even though subsequent thereto an issuer decides to make a...

To continue reading