Category Archives for "Publications and Resources"

Memorandum RE: Pay v. Performance Disclosure Rules

Item 402(v) of Regulation S-K

On August 25, 2022, the Securities and Exchange Commission (SEC) adopted Item 402(v) of Regulation S-K, requiring companies to provide certain “pay versus performance” disclosures regarding the relationship between executive compensation actually paid and the company’s financial performance in any proxy statement or information statement for which Item 402 executive compensation disclosure is required. 

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Client Alert: New York Adopts Revised Regulations for Individuals of Registered Investment Advisers


In an effort to modernize its registration function, to better conform to the federal securities registration regime, to cure industry confusion as to certain registration requirements and to better track exam requirement compliance of thousands of investment adviser representatives (“IARs”) providing investment advice to New Yorkers, the New York Investor Protection Bureau of the Department of Law (“Department”) has proposed revisions to its current regulations.

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2020 Income Tax Rates and Deductions

Sichenzia Ross Ference has prepared a tax chart showing all proposed tax changes under Biden vs. current under Trump.

It is a downloadable PDF titled “2020 Income Tax Rates and Deductions” that you can access by clicking the link below.

Click here for 2020 income tax rates and deductions


This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on as, specific tax, legal or accounting advice. Each individual’s situation is unique and may require customized advice.  We recommend that you consult your own tax and accounting advisors before engaging in any transaction.  Please contact Robert M. Birnbaum, Esq., or Carolyn M. Glynn, Esq. if you are interested in learning more about this or other estate planning topics.

60 Days And Counting: “Regulation Best Interest” Is Nearly Here. Are Independent Broker-Dealers Ready? What They Need to Know and Do

On June 5, 2019, the United States Securities and Exchange Commission (“Commission”) adopted Rule 15l-1 (“Regulation Best Interest”) under the Securities Exchange Act of 1934 (“Exchange Act”), which has a compliance date of June 30, 2020.[1]  Regulation Best Interest became effective September 10, 2019.  Notwithstanding the host of issues arising from the global pandemic, an economic recession and significant market volatility across essentially every sector, the Commission has made clear that the deadline for compliance with Regulation Best Interest and the related Form CRS requirements will not be delayed or extended.

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SRF CLIENT ALERT: Major Changes for Your IRA Account

Congress has made major changes for IRA accounts effective January 1, 2020:

The End of the Stretch IRA

Before 2020, anyone who inherited an IRA account was able to delay taking distributions from it over the course of his or her lifetime.  This frequently enabled the IRA beneficiary to stretch out the mandatory withdrawals over many decades, meanwhile allowing the IRA account to build up on a tax-deferred basis.  Beginning in 2020, with certain exceptions, anyone who inherits an IRA will have to take all of it out within 10 years.  The timing of the withdrawals during the 10 years is up to the beneficiary, but by the end of 10 years the entire account has to be taken down and all of the deferred income taxes have to be paid.

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Time to Make a Personal Estate Plan for Your (Financial) Exit or IPO

Your years of hard work have finally come to fruition.  Your company is going to go public or your business is going to be sold and what was once a dream is now about to become a reality.  This is the time when many entrepreneurs make million-dollar mistakes and forget about their partner Uncle Sam.  He has been waiting patiently in the wings for you to get rich; the richer you get, the happier he is.

The United States does not have a wealth tax yet, and it may never have one unless Elizabeth Warren is elected President.  However, it does have a death tax and so do a number of states, including New York; the less you plan the higher the death tax will be.  Whether your company will be going public or will be sold privately, you will be in a position to potentially save millions in estate taxes by putting a solid estate plan in place to protect your family.

Here’s the bad news: right now, the federal government has a death tax that will take 40% of everything you own over $11,400,000.  The amount exempt from tax is scheduled to be cut in half in a few years and possibly sooner, depending on the 2020 election.  Many States take a bite as well; for example if you live in New York, the State government has a death tax with rates that could take up to 16% of your assets.

But there’s good news: your company going public or selling your business presents you with an opportunity to potentially save millions in taxes.  It also enables you to structure a plan that will benefit your family and provide for their future well-being for many decades to come.  For more information and guidance on how this can be accomplished, please get in touch with Robert Birnbaum at or Jodi Zimmerman at of our Trusts and Estates department. You can also call our office at (212) 930-9700 to speak with our attorneys.

Client Alert: U.S. Senate and House of Representatives Approve 2018 Farm Bill

The long-awaited resurgence of the Agriculture Improvement Act of 2018, colloquially referred to as the 2018 Farm Bill, became more promising yesterday as its latest iteration received overwhelming bipartisan approval as it decidedly passed through the Senate on Tuesday, by a vote of 87-to-13, and easily passed through the House of Representatives, by a vote of 369-to-47. Now, the reality of the 2018 Farm Bill awaits the hand of President Donald Trump, who is expected to sign it into law before the end of the month.

Most notable, the 2018 Farm Bill is set to legalize hemp, a plant that’s nearly identical to marijuana and is a key source of the highly popular health and wellness ingredient cannabinoid, or CBD. If signed into law, the 803-page Bill would be the most significant change to the Controlled Substances Act (the “CSA”) since 1971, which is illustrative of the federal government’s recognition that outdated federal regulations do not sufficiently distinguish between hemp, including CBD derived from hemp, and CBD derived from marijuana.

In contrast to its predecessor, the voluminous 2018 Farm Bill expressly and unambiguously provides that the definition of “marihuana” under the CSA would be amended to exclude “hemp”, which, in turn, is defined as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” Succinctly, if signed into law, the 2018 Farm Bill would be the first piece of federal legislation that explicitly carves out certain permutations of CBD containing tetrahydrocannabinol (“THC”), the active ingredient that causes the psychoactive effect of marijuana, from the CSA.

Against this backdrop, financial institutions that have been reluctant to establish relationships with hemp-related business because of the inclusion of “hemp” in the CSA’s definition of “marihuana” and the February 14, 2014 guidance from the Department of the Treasury Financial Crimes Enforcement Network, may now turn a new leaf and embrace the estimated $1 billion industry.

Relatedly, and in furtherance of the federal government’s progressive initiative toward the proliferation of the rapidly increasing hemp market, the 2018 Farm Bill also places far-reaching limitations on the States’ abilities to prevent the transport of hemp across interstate commerce. Specifically, the 2018 Farm Bill states, in relevant part, that “No State or Indian Tribe shall prohibit the transportation or shipment of hemp or hemp products,” so long as such hemp or hemp products are produced in accordance with discrete guidelines set forth elsewhere in the 2018 Farm Bill.

Notwithstanding, this monumental shift in cannabis reform should not be misconstrued as a blanket legalization of hemp at the state level. Conversely, the 2018 Farm Bill provides a roadmap for states and Indian tribes to become the “primary regulators” of hemp production by submitting “a plan under which the State or Indian tribe monitors and regulates” the production of hemp within its borders. In this regard, those interested in getting involved in the hemp industry, in any capacity, are cautioned to review the applicable state law, which may carry more stringent restrictions than the 2018 Farm Bill, as well as any other pertinent federal authority.

Finally, it is worth noting that nothing in the 2018 Farm Bill implicates the status quo of marijuana or CBD derived from marijuana, both of which remain illegal under federal law. And while the legal landscape remains somewhat hazy, bipartisan agreement of the 2018 Farm Bill marks a long-overdue, massive step forward for the U.S. hemp industry.

About the authors

S. Ashley Jaber
Latest posts by S. Ashley Jaber (see all)
    Robert Volynsky
    Latest posts by Robert Volynsky (see all)

      California’s New Commercial Financing Disclosure Legislation


      On August 31, 2018, the California State Senate passed novel legislation, Senate Bill 1235, which requires new disclosures for certain commercial financing, such as loans, factoring transactions, and, potentially, merchant cash advances (MCAs). California Governor Jerry Brown has until September 30 to sign this legislation, and it appears likely that he will. continue reading >>

      Under new tax law, sales by foreign partners of U.S. partnership interests are once again taxable.

      In an August 2017 posting we reported that the U.S. Tax Court had held that, notwithstanding an IRS revenue ruling to the contrary, the sale by a foreign partner of his interest in a U.S. partnership was not a taxable transaction to him (assuming he was not otherwise a U.S. taxpayer), just as the sale of stock in a U.S. corporation is not a taxable transaction to a foreign shareholder. (“Tax Court: Foreign investors not taxable on sales/liquidations, of U.S. partnership interests.”)

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      Partner Jeff Fessler Joins Client ContraVir Pharmaceuticals, Inc. at NASDAQ Opening Bell Ringing

      Press Release – New York, NY – March 22, 2016 – Sichenzia Ross Friedman Ference LLP partner Jeff Fessler joined representatives of client ContraVir Pharmaceuticals, Inc., a biopharmaceutical company focused on the development and commercialization of targeted antiviral therapies, at the NASDAQ MarketSite in Times Square to ring the March 21 closing bell. continue reading >>

      Blog Post – Founding Partner Marc Ross Shares “Regulation A+: Funding The Start-up”


      Start-ups looking to raise no more than $50 million now have the ability to do so by a Regulation A+ offering.  The recent amendments to Regulation A, which is Regulation A+, under the Securities Act of 1933, as amended (the “Securities Act”), allow companies to increase the amount of capital that they can raise in a Regulation A offering from $5 million to $50 million over a 12-month period. continue reading >>

      FAST Act Includes Changes to Securities Laws

      By Avital Perlman

      President Obama signed the Fixing America’s Surface Transportation Act, or FAST Act, into law on December 4, 2015.  The FAST Act, which is aimed at improving the country’s surface transportation infrastructure, also contains several sections that amend securities laws to ease regulatory burdens for smaller companies.

      Improving Access to Capital for Emerging Growth Companies, or EGCs continue reading >>

      Utilizing a “Shelf” Registration Statement for a Follow-On Public Offering



      Under the Securities Act of 1933, as amended (the “Securities Act”), any public securities offering must be registered with the Securities and Exchange Commission (the “SEC”). In a follow-on public offering, a publicly reporting company offers securities to the public in an offering registered with the SEC subsequent to the completion of the issuer’s initial public offering.

      Form S-3 and Rule 415 Eligibility

      The general form for registration of securities under the Securities Act is Form S-1. A filing made on Form S-1 must include extensive disclosure regarding the issuer and the offering, including, among other things, audited financial statements, a description of the issuer’s business and properties, management’s discussion and analysis of financial condition and results of operations, identification of and certain information regarding officers and directors of the issuer and its principal stockholders, the terms of the offering, and risk factors and plan of distribution (such as underwriting arrangements) for the offering.

      As an alternative to the filing of a Form S-1, issuers that meet the requisite conditions may register offerings on Form S-3, a “short-form” registration pursuant to which certain information about the issuer may be incorporated by reference from previous and future filings made by the issuer with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). It should be noted that Form S-1 also allows incorporation by reference under certain conditions, but only to prior filings made under the Exchange Act. By incorporating by reference future filings made by the issuer under the Exchange Act, a Form S-3 registration statement obviates the need to file post-effective amendments when, for example, the issuer’s financial statements included in the initial registration statement are no longer deemed current, or there are otherwise material changes that have occurred to the issuer that are disclosed in filings made with the SEC.

      Accordingly, issuers seeking to do a follow-on public offering will, subject to eligibility, file a Form S-3 rather than a Form S-1. To be eligible to file a registration statement on Form S-3, an issuer must meet the following conditions:

      (i) the issuer is organized under the laws of, and has its principal business operations, in the United States (or files the same reports with the SEC as a domestic issuer subject to the Exchange Act);

      (ii) the issuer has a class of securities registered pursuant to Section 12(b) or 12(g) under the Exchange Act, or is required to file reports under Section 15(d) under the Exchange Act;

      (iii) the issuer has been subject to the requirements of Section 12 or 15(d) of the Exchange Act and has filed all the material required to be filed pursuant to the Exchange Act for a period of at least twelve calendar months immediately preceding the filing;

      (iv) the issuer has filed in a timely manner all reports required under the Exchange Act during the twelve calendar months and any portion of a month immediately preceding the filing of the registration statement, other than a Current Report that is required solely pursuant to certain specified 8-K Items; and

      (v) the issuer has not, since the end of the last fiscal year for which its audited financial statements were included in a report filed pursuant to the Exchange Act: (a) failed to pay any dividend or sinking fund installment on preferred stock; or (b) defaulted (i) on any installment or installments on indebtedness for borrowed money, or (ii) on any rental on one or more long term leases, which defaults are material to the financial position of the issuer.

      Follow-on offerings are typically conducted under Rule 415 under the Securities Act, which allows for an “offering to be made on a continuous or delayed basis in the future”. Thus, under Rule 415, an issuer may, at its convenience, file a “shelf” registration statement which includes a “base” prospectus, have the registration statement declared effective by the SEC, and subsequently, when it deems conditions suitable, conduct an offering by taking securities down “off the shelf.” The shelf registration statement will specify a maximum dollar amount, and the type of securities (for example, common stock, preferred stock, warrants, debt securities and/or units consisting of some combination of the foregoing), that may be offered, but will not include specific offering terms. To take securities “off the shelf,” the issuer will file a prospectus supplement which sets forth the specific terms of the offering (for example, underwriting arrangements, and price, number and type of securities). Unlike the original “base” Form S-3 filing, the prospectus supplement does not need to be declared effective by the SEC. The issuer can conduct multiple offerings on a single Form S-3 shelf registration statement, for a period of up to three years from when the shelf Form S-3 was declared effective, by filing a prospectus supplement for each such offering, up to the maximum dollar amount initially registered on the shelf registration statement (subject to any “baby shelf” limitations as discussed below), so long as the issuer remains S-3 eligible (which is determined on an annual basis when the issuer files its Annual Report on Form 10-K). Primary offerings made pursuant to Rule 415 must be made on (or be eligible for) Form S-3 and thus are typically registered on Form S-3.

      “Baby Shelf” Offerings and Calculating “Public Float”

      In addition to the issuer meeting the requirements for the filing of a Form S-3 specified above, primary offerings of common equity for cash made under Form S-3 must also meet the following conditions:

      (i) the aggregate market value of the issuer’s common equity held by non-affiliates of the issuer (sometimes referred to as the “public float”) is $75 million or more; or

      (ii) under what is known as a “baby shelf” offering, for an issuer which has a public float of its common equity of less than $75 million, (a) the aggregate market value of securities sold by the issuer under Instruction I.B.6 of Form S-3 (for primary offerings for cash) during the period of 12 months immediately prior to, and including, the sale is no more than one-third of its public float, (b) the issuer has not been a shell company for more than 12 months, or if it has been a shell company at any time previously, has filed current “Form 10 information” (which includes similar disclosure as required by a Form S-1 registration statement) with the SEC at least 12 months prior thereto, and (c) the issuer has a class of equity securities listed on a national securities exchange.

      Thus, to conduct a “baby shelf” offering, an issuer must have a class of equity securities listed on a national securities exchange, such as the New York Stock Exchange or the Nasdaq Stock Market. This requirement does not apply to companies that have a public float of at least $75 million, which may conduct unlimited “shelf” offerings (subject to meeting the other conditions set forth above). The availability of “baby shelf” offerings to companies with less than $75 million in their public float, which has existed since amendments to Form S-3 were effected in January 2008, has provided an additional incentive for small companies to seek a listing on a national securities exchange while providing such companies with greater opportunities to conduct primary public offerings.

      “Common equity” is defined for purposes of S-3 eligibility as any class of common stock or any equivalent interest and may include non-voting common stock. The calculation of the public float for purposes of determining whether the “baby shelf” limitations apply is based on the price at which the common equity was last sold, or the average of the bid and asked prices of such common equity, for such common equity as of any date within 60 days prior to the date of filing of the shelf Form S-3, multiplied by the number of shares of common equity held by non-affiliates. Non-affiliates are generally presumed to include shareholders other than officers, directors and shareholders who beneficially own 10% or more of the outstanding common equity. An issuer may use the highest such closing price within such 60 day period, multiplied by the number of shares held by non-affiliates as of the date of filing (or the number of shares held by non-affiliates as of any day within such 60 day period, which need not be the same date as the date used for the price of the common equity), to determine whether the “baby shelf” limitations apply or whether the issuer can sell an unlimited amount of securities off the shelf Form S-3. If the public float exceeds $75 million as of the date of the filing of the shelf Form S-3, calculated based on the 60 day lookback period described above, and subsequently falls below $75 million, the issuer will nonetheless not be subject to the “baby shelf” limitations until the issuer files its next Annual Report on Form 10-K, at which time such eligibility is reassessed.

      Similarly, if an issuer is subject to the “baby shelf” limitation of selling only one-third of its public float over a one year period, the amount of securities an issuer may sell under a “baby shelf” offering will be equal to one-third of the public float as determined based on the price at which the common equity was last sold, or the average of the bid and asked prices of such common equity for such common equity as of any date within 60 days prior to the date of sale, multiplied by the number of shares of common equity held by non-affiliates. The date used for the price of the common equity and the date used for the number of shares held by non-affiliates do not need to be the same. For example, if, as of October 20, 2015, the highest closing price of an issuer’s common stock within the past 60 days was $3.00 which occurred on September 10, 2015, and the issuer has 10,000,000 shares of common stock held by non-affiliates as of October 20, 2015, the issuer may calculate its public float as of October 20, 2015 to be equal to $30,000,000 (notwithstanding that there may have been fewer than 10,000,000 shares held by non-affiliates as of September 10, 2015), and may sell up to $10,000,000 of common stock under Instruction I.B.6 of Form S-3 during the one year period ending on October 20, 2015. Further, if the issuer’s public float was less than $75 million as of the date of the filing of the shelf Form S-3, but subsequently, while the Form S-3 is effective, the public float exceeds $75 million, such “baby shelf” limitations will no longer apply. The value of securities underlying warrants included in a “baby shelf” offering will also count towards the “baby shelf” limitations.

      The information in this article is for general, educational purposes only and should not be taken as specific legal advice.

      Download the PDF version here

      About the author

      Jeffrey Cahlon
      Latest posts by Jeffrey Cahlon (see all)

        23 States Legalized Marijuana – Bankruptcy Courts Remind Us That It’s Legal in None of Them

        “There was a time a few years ago when the United States was spoken of in the plural number.
        Men said ‘the United States are’ — ‘the United States have’ — ‘the United States were.’ But the war changed all that.”   The Washington Post, April 24, 1887.   The phrase “United States” became a singular noun after the Civil War. continue reading >>