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Megan Gates is Co-chair of Mintz Levin’s Securities & Capital Markets Practice. She counsels public companies on compliance and disclosure obligations, public and private financing matters, and merger and acquisition transactions, and advises clients on corporate governance matters such as Sarbanes-Oxley compliance. Megan is frequently invited to speak at industry conferences on topics including securities offerings, corporate governance, and compliance matters.

The IPO market in 2016 was abysmal, especially for the life sciences sector. Annual IPO proceeds fell to the lowest level since 2003. The IPO market forecast for 2017 is uncertain. Some life sciences companies that went public during the last IPO wave ending in 2015 still have plenty of cash yet they have “hit the wall” clinically, making them “fallen angels”. In this environment, the “fallen angel” reverse merger has emerged as an attractive way for many promising life sciences companies to raise capital and to go public.

In response to these trends, my colleague Matt Gardella and I have assembled a stellar panel of experts for a discussion about fallen angel reverse mergers as an alternative to the traditional IPO. Please join us at Mintz Levin on Monday, March 6th starting at 3:00 PM to learn whether this important approach to going public might be right for your company. Our panel will provide the perspectives of the deal lawyer, the private company, the fallen angel, the investor, the investment banker, and the Nasdaq listing consultant. You will gain insights into the key issues involved in evaluating a fallen angel reverse merger strategy, negotiating a deal, smoothly completing a transaction, and being ready for life as a public company.

Please note: This panel is an in-person event at our Boston offices with a networking period afterwards.

Click here for information and registration.

By Sarita Malakar and Megan Gates

The Securities and Exchange Commission recently issued proposed amendments to increase the financial thresholds in the definition of a “smaller reporting company” that, if adopted, will increase the number of issuers that qualify as smaller reporting companies and thereby would benefit from the scaled disclosure requirements. The proposed amendments are intended to promote capital formation and reduce compliance costs for smaller issuers, while maintaining investor protections.

This advisory summarizes the proposed amendments issued by the SEC.

Read the full advisory >>

Every year at around this time, the Mintz Levin securities lawyers are busy collaborating with our December fiscal year-end clients to prepare for the annual year-end reporting season, involving a flurry of 10-Ks, proxy statements, governance review and upkeep, and related matters. Pam Greene and I have worked together for several years now (more than we would care to admit!) on what we fondly refer to as the “year-end kickoff memo,” which you can find here. Each year, we focus on a combination of new developments, reminders of things to keep in mind, and anticipated “hot topics” from the perspective of regulators, shareholders and companies themselves. We are pleased this year to have some terrific contributions to the memo from our partner Bret Leone-Quick, who focuses on securities litigation and related governance issues. We welcome your questions on the memo and look forward to working with all of you on this important annual process.

Originally created by Congress in 1990, the EB-5 program was intended to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot immigration program first enacted in 1992 and regularly reauthorized since, certain EB-5 visas also are set aside for investors in Regional Centers designated by the United States Citizenship and Immigration Services, based on proposals for promoting economic growth. Unscrupulous parties have on occasion taken advantage of interested parties and perpetrated schemes in this area on people who are understandably keen to take part in this otherwise very beneficial program.

Our colleagues at the EB-5 Matters blog have written an interesting post on one such case in Florida. Check it out here.


On Monday, October 19, I’ll be moderating a panel on Strategic Considerations for Navigating a Dual-track M&A and Initial Public Offering Pathway at the Association of Corporate Counsel’s Annual Conference here in Boston. I’ll be joined on the panel by Pete Zorn, Esq., VP of Corporate Development and General Counsel of Albireo Pharma; Stan Piekos, former CFO of NEXX Systems; and Joe Ferra, Managing Director in the Healthcare Investment Banking Group at JMP Securities. If you’re attending the ACC conference, we hope you can join us that day at 4:30 for what we expect will be a great discussion. Continue Reading ACC Annual Conference Panel: Dual-Track M&A and IPO Pathways

On October 13 from 1 – 2:30 pm ET, join Pam Greene and a panel of other experts for a timely webinar covering Regulation A+: Practical Tips and Guidance for Launching a Mini-IPO. Regulation A+ went into effect in June 2015 to allow private US and Canadian based companies to raise equity – up to $20 million under Tier I and up to $50 million under Tier II – from both accredited and nonaccredited investors, subject to certain limitations.

During this webinar, our distinguished panel, including Pam Greene, member in the Corporate and Securities Practice at Mintz Levin;   TJ Berdzik, CFA, of StockCross Financial Services, Inc.; Maggie Chou, of OTC Markets; Yoel Goldfeder, of Vstock Transfer; and Rudy Singh, of S2 Filings, will discuss the legal and business considerations in launching a Tier II Regulation A+ offering, how investors can achieve liquidity through the OTC Market, and why many are calling Tier II offerings a “Mini-IPO”.

We hope you can take part in what is sure to be an informative discussion. Click here to register.

Mintz Levin Partner Pam Greene was interviewed on Friday by Law360 regarding the advent of Regulation A+ and its anticipated impact on capital-raising by smaller companies. Pam noted that Tier 2 offerings can be likened to a “mini IPO” because they let companies raise capital under less onerous requirements than a full-fledged public company faces. “This will be an easier path for smaller companies to go public that is less expensive than an IPO,” Greene said.

Read more here.

The SEC has also posted links to the new forms to be used in connection with Regulation A+ offerings and post-offering reporting:

Form 1-A: Regulation A Offering Statement

Form 1-K: Annual Reports and Special Financial Reports

Form 1-SA: Semiannual Report or Special Financial Report Pursuant to Regulation A

Form 1-U: Current Report Pursuant to Regulation A

Form 1-Z: Exit Report Under Regulation A

Form 8-A: Registration of Certain Classes of Securities Pursuant to Section 12(b) or (g)


Last week, I attended a conference organized by the illustrious Broc Romanek of, whose blog and website provide untold amounts of useful, practical and timely guidance to securities practitioners. The conference provided an opportunity for 100 women from the securities and corporate governance worlds to network with and learn from each other. One of the highlights for me was hearing from the indomitable Peggy Foran, Chief Governance Officer of Prudential Financial, Inc. and by any measure one of the foremost luminaries in the world of corporate governance.

Continue Reading Women’s 100 Securities Conference – Thanks to Broc Romanek

Securities Matters readers are invited to join Kristin Gerber and me at the Cambridge Innovation Center this Thursday, April 16, starting at 4:30, for an update on the status of equity crowdfunding rules at both the federal and state levels. Given that it has been 18 months (and counting) since the SEC first proposed rules to implement the JOBS Act’s directive to make crowdfunding a reality, we will take a look not just at the SEC’s rulemaking but also the increasing activity at the state level (including crowdfunding rules passed in January 2015 right here in Massachusetts). We’ll also discuss other means of capital-raising for the small, scrappy start-up that may have greater practical, near-term application. The program is free to attend, so we hope to see you there.


When a significant stockholder in a publicly-held company is considering plans to take the company private, how soon must the stockholder disclose those plans in a Schedule 13D filing?

The SEC recently announced settlements of charges against eight officers, directors, and/or major shareholders in cases involving three different public companies for failing to file timely amendments to Schedule 13D stock ownership disclosure forms to report plans to take those companies private. Like the SEC’s actions last September against late Section 16 form filers, these new actions appear to be intended to remind officers, directors, and shareholders at public companies of the importance of making timely disclosures mandated by SEC rules, following the “broken windows” approach to enforcement outlined by SEC Chair Mary Jo White.

In the orders relating to these cases, the SEC took the position that a Schedule 13D disclosure “must be amended when a plan … has been formulated” with respect to a disclosable matter, such as a going-private transaction, even where the filer’s previous Schedule 13D generally reserved the right to engage in the kinds of transactions subject to disclosure. In commenting on these cases, SEC Enforcement Director Andrew Ceresney emphasized that broad boilerplate statements are not sufficient: “Stale, generic disclosures that simply reserve the right to engage in certain corporate transactions do not suffice when there are material changes to those plans, including actions to take a company private.” The SEC has also cautioned that an amendment may also be required even before a plan has been definitively formulated if there is a material change in the facts set forth in a previous Schedule 13D.

Section 13(d)(1) of the Securities Exchange Act and SEC Rule 13d-1 together require any person who acquires beneficial ownership, directly or indirectly, of more than five percent of certain classes of equity securities, including voting stock in any publicly registered company, to file a Schedule 13D (or in some cases Schedule 13G) within 10 days of the acquisition. Item 4 of Schedule 13D requires the filer to “[s]tate the purpose or purposes of the acquisition of securities of the issuer” and “[d]escribe any plans or proposals which the reporting persons may have which relate to or would result” in certain specified changes in the company’s corporate or capital structure, including any extraordinary corporate transaction, such as a merger, reorganization or liquidation, or delisting the company’s securities. If there is any material change in the facts stated in a previously filed Schedule 13D, the filer must submit updated information under Section 13(d)(2) of the Exchange Act and SEC Rule 13d-2(a).

In the settled administrative proceedings announced recently, the SEC found that the respondent beneficial stockholders had violated Section 13(d) of the Exchange Act by failing to file timely Schedule 13D amendments disclosing plans to take the respective public companies with which they were associated private. The SEC noted that proof of scienter (a.k.a. “intent”) is not a prerequisite to establishing a violation of Section 13(d), and in none of these cases did the SEC find that that the violations were deliberate. The civil penalties assessed by the SEC ranged from $15,000 to $75,000.

Six of the eight cases concerned a going-private transaction involving a hospital management services company. In these cases, the company’s proxy statement for the transaction, filed in September 2014, revealed that the company and the respondent stockholders had begun considering privatizing the company in early 2011. By January 2014, according to the SEC, the respondents had taken specific steps indicating that they intended to take the company private. These steps included informing management that they would support a going-private transaction and securing waivers from preferred stockholders. Over the next several months, the respondents allegedly discussed the specific structure of the transaction and related valuation issues. But the respondents did not file amended Schedule 13Ds disclosing that they were evaluating a potential going-private transaction until April 2014 or, in most cases, June 2014. The SEC also found that the respondents had violated Section 16 of the Exchange Act by failing to file timely Form 4s and Form 5s reporting previous acquisitions of stock in the company. In another case, the majority owner of a publicly held company did not update its Schedule 13D until eight months after it had informed management that it intended to privatize the company. And in the remaining case, the chairman and CEO of a publicly traded footwear company began to consider going private in October 2012 and then initiated discussions with other shareholders about privatization, according to the company’s proxy statement, but he did not file an amended Schedule 13D until August 2013.

These actions by the SEC present a potential conundrum for Schedule 13D filers. An insider who intends to effectuate a going-private transaction will frequently want to keep its intentions guarded until disclosure is absolutely necessary. At the same time, the insider must be mindful of not materially altering the “plans and proposals” with respect to the issuer (which are required to be described in Item 4 of the Schedule 13D) without updating its disclosure. The lesson here seems to be that, while insiders will initially want to file Schedule 13D disclosures that are sufficiently broad to encompass a wide range of possible actions concerning the subject company, these disclosures must be amended promptly following a material change or development in those plans. Securities and disclosure counsel can assist in determining when the materiality line has been crossed, and also when it appears on the horizon.