An Introduction to Securities Law for the General Practitioner

If you represent business, corporate or entrepreneurial clients, sooner or later you will be asked to help them raise capital by offering their securities to potential investors. A basic knowledge of federal and state securities law is essential to advising and counseling clients in this situation, but you do not have to be a “securities lawyer” in order to avoid malpractice or fulfill your duty of competence in this situation. In this fast-paced, entertaining presentation, you will develop a basic understanding of the federal and state rules and regulations governing business capital formation.

Topics to be covered include:

When do nonsecurities lawyers need to know something about securities law?
The definition of a “security”
The U.S. Securities Act of 1933 and the different types of “private offerings” of securities that are exempt from its requirements
Regulation D and Rules 504, 506(b) and 506(c)
State securities or “blue sky” laws
Form D filing requirements for private offerings of securities
What needs to be included in your client’s “pitch deck” or “offering statement” to prospective investors; and
The basics of crowdfunded offerings under SEC regulations.

Topics covered include:

Banking & Finance Business Law Law Practice

Agenda:

Introductory Overview

Brief introduction of the presenter
How do businesses raise capital, and when do the securities laws apply?

Understanding the Federal and State Securities Laws

An overview of federal securities laws and regulations, including Regulation D
An overview of state securities (“blue sky”) laws
Understanding the concepts of “accredited investor” and “general solicitation”
When you need to involve a securities law specialist

Crowdfunded Offerings of Securities

Overview of Regulation Crowdfunding
Dealing with crowdfunding “portals”

Your Client’s “Pitch Deck” or “Offering Statement”

What must be included under SEC Rule 502(b)
Preparing the “risk factors” disclosure

Managing Your Legal Liability in Securities Transactions

Securities law and your malpractice policy
Understanding there is no such thing as “perfect compliance” with securities law

Duration of this webinar: 60 minutes

Originally broadcast: May 29, 2025 11:00 AM PT

Webinar Highlights

This webinar is divided into section summaries, which you can scan for key points and then dive into the sections that interest you the most.

00:00 Speaker Introduction and Overview

Nina introduces Cliff Ennico, who has many years of experience in legal and tax issues for entrepreneurs, and will discuss securities law for general practitioners. Cliff clarifies that he is not a securities law specialist but aims to provide a basic understanding for non-specialists. He outlines the focus of his practice on small businesses and startups, noting the importance of knowing when to consider securities law.

05:02 Small Business vs. Startups

Cliff distinguishes between small businesses and startups. He explains that small businesses aim to create long-term value for future generations, often involving owners who are also workers. Startups, on the other hand, are scalable and designed for rapid growth, often seeking outside investors. Cliff outlines the stages of capital raising for startups, from founders' money to friends and family rounds, and further to angel and venture capital. He emphasizes the importance of securities laws when raising money from non-personal connections, highlighting their role in protecting unsophisticated investors.

09:26 Understanding Securities and Exemptions

Securities laws are designed to protect investors from fraudulent schemes, as illustrated by historical scams like selling interests in the Brooklyn Bridge. Cliff explains the concept of securities, including stocks, bonds, and investment contracts, referencing the Howie case as a defining moment. He differentiates between debt and equity investments, noting the obligations and rights associated with each. Debt holders receive fixed returns and are prioritized in bankruptcy, while equity investors share in profits and have management input.

15:31 Federal and State Securities Regulations

Cliff outlines federal securities regulations, including the Securities Act of 1933. He explains the importance of Regulation D as a safe harbor for certain exempt offerings and the definition of accredited investors. Cliff highlights the role of state securities laws, known as Blue Sky Laws, and the need for compliance with both federal and state regulations. He discusses various exemptions under federal law, such as Sections 4(a)(2), 4(a)(5), and 4(a)(6), and their implications for securities offerings. Cliff emphasizes the importance of filing Form D with the SEC and NASAA for compliance and the differences between accredited and non-accredited investors.

42:25 Offering Documents and Investor Relations

Cliff explains the importance of offering documents like teasers, pitch decks, and offering memos in securities transactions. He outlines the required contents of these documents, including detailed financial disclosures and risk factors. Cliff stresses the need for realistic financial projections and the inclusion of legal and accounting fees in cost estimates. He highlights the importance of disclosing competition and management team credibility in pitch decks. Cliff advises on stress testing financial projections and the necessity of risk factor disclosures to comply with legal requirements.

55:51 Best Practices and Compliance

Cliff advises limiting offerings and focusing on accredited investors to simplify compliance with securities laws. He suggests considering multiple exemptions and complying with state laws where feasible to avoid legal issues. Cliff emphasizes the importance of malpractice insurance coverage for securities law practice and the potential for lawsuits from unhappy investors. He discusses the need for due diligence in verifying accredited investor status and the pitfalls of Form D filings. Cliff concludes with best practices for securities offerings, including the importance of consulting a securities law specialist when necessary.

Please note this AI-generated summary provides a general overview of the webinar but may not capture all details, nuances, or the exact words of the speaker. For complete accuracy, please refer to the original webinar recording.

Continuing Legal Education (CLE) Credits

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California CLE

Status: Approved

Credits: 1.00 General

Earn Credit Until: June 30, 2026

South Carolina CLE

Status: Approved

Credits: 1.00 General

Difficulty: All Levels

Earn Credit Until: December 31, 2025

North Carolina CLE

Status: Approved

Credits: 1.00 General

Earn Credit Until: February 28, 2026

Texas CLE

Status: Approved

Credits: 1.00 General

Earn Credit Until: April 30, 2026

This presentation is approved for one hour of General CLE credit in California, South Carolina (all levels), and North Carolina. This course has been approved for Minimum Continuing Legal Education credit by the State Bar of Texas Committee on MCLE in the amount of 1.00 credit hours.

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Speaker

Cliff Ennico Attorney
Law Office of Clifford R. Ennico

CLIFFORD R. ENNICO (www.cliffennico.com) is widely considered to be one of America's leading experts on the legal and tax problems facing entrepreneurs and privately-owned businesses. Read More ›