Form 8-K- Today is the first in a LawCast series talking about Form 8-K. On September 26, 2016, and again on the 27th, the SEC brought enforcement actions against issuers for the failure to file 8-K’s associated with corporate finance transactions and in particular PIPE transactions involving the issuance of convertible debt, preferred equity, warrants and similar instruments. Prior to the release of these two actions, I have been hearing rumors in the industry that the SEC has issued “hundreds” of subpoenas to issuers related to PIPE transactions and in particular to determine 8-K filing deficiencies, Although hundreds is likely an exaggeration, the SEC is certainly focusing on this space. Back in August 2014, the SEC did a similar sweep related to 8-K filing failures associated with 3(a)(10) transactions. The 8-K filing deficiency actions were a precursor to a larger SEC investigation on 3(a)(10) transactions themselves which culminated in two well-known enforcement actions against active 3(a)(10) participants (the Ironridge companies and IBC Funds) and resulted in a chill on the 3(a)(10) activity in the industry as a whole. 3(a)(10) actions continue today but the volume of transactions has dramatically reduced and the attention to due diligence, detail and reporting requirements has likewise increased...

1. Form 8-K
Form 8-K- Today is the first in a LawCast series talking about Form 8-K. On September 26, 2016, and
again on the 27th, the SEC brought enforcement actions against issuers for the failure to file 8-K’s
associated with corporate finance transactions and in particular PIPE transactions involving the
issuance of convertible debt, preferred equity, warrants and similar instruments. Prior to the release
of these two actions, I have been hearing rumors in the industry that the SEC has issued “hundreds” of
subpoenas to issuers related to PIPE transactions and in particular to determine 8-K filing deficiencies,
Although hundreds is likely an exaggeration, the SEC is certainly focusing on this space…

2. Form 8-K
• Back in August 2014, the SEC did a similar sweep related to 8-K filing failures associated
with 3(a)(10) transactions. The 8-K filing deficiency actions were a precursor to a larger
SEC investigation on 3(a)(10) transactions themselves which culminated in two well-
known enforcement actions against active 3(a)(10) participants (the Ironridge companies
and IBC Funds) and resulted in a chill on the 3(a)(10) activity in the industry as a whole.
3(a)(10) actions continue today but the volume of transactions has dramatically reduced
and the attention to due diligence, detail and reporting requirements has likewise
increased.
• The SEC rarely takes enforcement action or expends time or resources on investigating
the failure to file an 8-K. When such issues arise, it is usually in connection with a routine
review of a company’s SEC reports or as part of the comment and review process
associated with the filing of a registration statement. All reports filed with the SEC are
subject to SEC review and comment and the Sarbanes-Oxley Act requires that the SEC
undertake some level of review of every reporting company at least once every three
years.

3. Form 8-K
• As was the case with the SEC’s investigation into 3(a)(10) transactions,
it is my belief that the SEC is reviewing the PIPE industry as a whole
and in particular the process, procedure and effects associated with
convertible instruments. The majority of these transactions involve
the issuance of convertible notes which then convert into common
stock following a holding period in reliance on Rule 144 and Section
3(a)(9) of the Securities Act of 1933. Any convertible instrument can
be used in the same manner, such as preferred stock and warrants.

4. Form 8-K
• The use of convertible instruments in PIPE transactions is perfectly legal and acceptable.
However, like any other aspect of the securities marketplace, it can be abused. My belief
is that the SEC is using the investigation into the failure to file 8-K’s in association with
these transactions to assist in a larger investigation into related fraud and other
violations. If a company is failing to file an initial 8-K for the transaction and subsequent
8-K’s to report the issuance of securities upon a conversion, there may also be other
issues and violations. Examples of abusive or improper activity could include:
• (i) backdating of notes or failure to provide the funding associated with the note;
• (ii) improper undisclosed affiliations between investors and the company or its officers and
directors;
• (iii) manipulative trading practices;
• (iv) improper stock promotion;
• or (v) trading on insider information.

5. Form 8-K