You are the CEO of L'Malle LLC, a nonpublic company that builds and manages shopping malls. L'Malle plans to raise $4,400,000 for construction of L'Malle's newest shopping center complex, Grande L'Malle Geneva. In an effort to avoid the application of the Securities Act of 1933, L'Malle's CFO has proposed that L'Malle issue 22 Profit Participation Plans (PPP) to two insurance companies, four mutual funds, and 16 individual investors. Under the PPPs, each owner will contribute $200,000 cash to finance the construction of Grande L'Malle Geneva (GLG) and receive 3 percent of the profits generated by GLG. L'Malle will be the exclusive manager of GLG, making all decisions regarding its construction and operation, for which L'Malle will receive a fee equal to 34 percent of GLG's profits.
Are the PPPs securities under the Securities Act of 1933?
If the PPPs are securities, may L'Malle sell them pursuant to a registration exemption from the Securities Act of 1933 under Regulation A, Rule 504, Rule 505, or 506?
L'Malle decides to sell the PPP's directly to investors by making a Regulation A offering. As CEO, you will accompany L'Malle's CFO and communications vice president when they visit prospective investors. During those visits, you and the other L'Malle's executives will present copies of the offering circular to prospective investors and make oral reports about the offering, GLG, and L'Malle's business and prospects. You will also answer the investors' questions about L'Malle and GLG.
Should you be fearful about having liability to the investors under Section 12(a)(2) of the 1933 Act and Rule 10b-5 of the Securities Exchange Act of 1934?
L'Malle decides to make a public offering of its common shares by registering the offering under the Securities Act of 1933 and complying with the requirements of Section 5 of the 1933 Act. The shares will be sold by a firm commitment underwriting.
Under what legal conditions may L'Malle release earnings reports and make other normal communications with its shareholders and other investors?
After L'Malle has filed its 1933 Act registration statement with the Securities and Exchange Commission and before the SEC has declared the registration statement effective, under what legal conditions may you (the CEO) and L'Malle's CFO conduct a road show where you pitch the shares to mutual fund investment managers in several cities?
During that waiting period, may L'Malle post its preliminary prospectus and have an FAQ page for prospective investors at the offering's Web site?
After the SEC has declared the registration statement effective, under what legal conditions may L'Malle confirm the sale of shares to an investor?
During that posteffective period, under what legal conditions may L'Malle direct prospective investors from the offering's Web site to L'Malle's corporate Web site, where investors may obtain additional information about L'Malle?
