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Mike Liles, Jr. Working to Develop a Viable Simplified Protocol for Public Offerings

As authorized by the recently-enacted JOBS Act, the Securities and Exchange Commission recently proposed a simplified and relatively inexpensive public offering protocol under SEC Regulation A which would enable U.S. and Canadian small businesses to raise up to $50 million each year in public offerings within the United States. In anticipation of this proposal, Mike Liles, Jr., a Karr Tuttle Campbell Shareholder and member of our Corporate Finance Practice Group, had forwarded a pre-proposal comment letter to the SEC advocating use of new Regulation A+ to reinstate regional public offerings within the U.S. of the type typical by small businesses in the Pacific Northwest in the 1970s, 1980s and 1990s. These offerings had declined over the years since the enactment of the Sarbanes Oxley Act of 2002, which imposed on companies and underwriters burdensome regulatory requirements. In the proposal, the SEC cited Liles’ comment letter for advocating that “preemption of registration under state securities laws [is] a practical necessity in these offerings” and provided that state regulation of those offerings be preempted.

In the meantime, Liles had undertaken to serve as Chair of a Regulation A+ Working Group of the Business Law Section of the American Bar Association which has provided feedback to the North American Securities Administrators Association’s Small Business/Limited Offerings Project Group that has developed NASAA’s coordinated review program. Liles had reviewed the details of that coordinated review program and believed that, if adopted and supported by a significant number of states, it would provide a viable and efficient review protocol for state processing of Regulation A+ offerings. Accordingly, Liles submitted a supplemental comment letter that touched on the coordinated review process being planned by NASAA, the definition of “qualified purchaser,” Canadian offerings, and National Securities Exchange Listings, among other issues. In coordination with certain Silicon Valley securities lawyers, he also submitted a comment letter concerning removal of several disclosure requirements under SEC Regulation S-K, applicable broadly to SEC regulated public offerings, which comment letter was cited multiple times in the SEC’s Report on Review of Disclosure Requirements in Regulation S-K.

NASAA’s current president and eighteen of NASAA’s leadership forwarded comment letters to the SEC citing Liles’ comment letter in recognition of the viability of NASAA’s coordinated review program for Regulation A+ offerings. Irrespective of whether state regulators are preempted by the final regulations from processing Regulation A+ offerings, Regulation A+ will be adopted in some form by the SEC in coming months and should provide a viable format for small businesses to make affordable regional public offerings.

During the course of Liles’ extensive practice in securities law, he has been the primary legal adviser in over 30 major public offerings, most of which have been initial public offerings, and an equal number of major mergers and acquisitions. As lead counsel he has also advised on strategies, negotiated transactions and prepared documentation for private placements, bridge financings, venture financings, public company regulatory compliance, proxy contests, strategic alliances, joint ventures, protection of intellectual property, officer and director risk management, employment, incentive and termination of key personnel, and corporate governance. He is a principal draftsperson of “SCOR,” the Small Company Offering Registration, a simplified public offering procedure developed for use in Washington State, which was later adopted by most other states and by the SEC.

Click to read Liles’ comment letters dated April 12, 2012, April 10, 2013, and January 17, 2014; NASAA’s comment letters dated February 19, 2014 and March 24, 2014; and the SEC Report in full.