SEC Summarizes Position on PIPE Transactions
Publication Date: February 01, 2007
The Securities and Exchange Commission is increasing its scrutiny of Private Investment in Public Equity (PIPE) transactions. It is well known that the Division of Enforcement has undertaken investigations into insider trading and improper short selling by PIPEs investors. Less known, but equally important, is that the Division of Corporation Finance likewise is enhancing its examination of whether issuers are registering PIPEs offerings appropriately.
Historically, the Division of Corporation Finance focuses on four questions when reviewing a PIPEs transaction for compliance with the Securities Act of 1933:
- Is the private investment complete?
- Is the public offering properly characterized as a secondary resale?
- Is the issuer registering the public offering on the proper form?
- Is there adequate disclosure about the terms and effect of the transaction?
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