Alexander M. Porcaro

Managing Associate

San Francisco


Read full biography at www.orrick.com

Alex Porcaro is a managing associate in Orrick's San Francisco office, where he focuses on internal investigations, securities litigation, and regulatory enforcement actions.

His recent clients include an automaker, a global retailer, a chocolatier, a Bay Area city, and a professional football team.

Before becoming a lawyer, Alex worked at several tech startups and was senior online editor for KQED Public Radio.

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Posts by: Alexander Porcaro

What Startups Need to Know About the Revised Reg D

Startups need funding, and most startups want to raise money with as little legal red tape as possible. But when a startup takes investment money, it is issuing securities, and federal securities laws generally require a company – or “issuer” – to register the offering and sale of any securities with the Securities Exchange Commission (“SEC”). The bad news is that most early-stage companies don’t have the legal resources to comply with the SEC’s registration and reporting requirements. The good news is that Congress and the SEC recognize this and so have created certain exemptions from the registration requirement.

The most commonly used exemptions derive from Sections 4(a)(2) and 3(b)(1) of the Securities Act of 1933. Section 4(a)(2) exempts issuer transactions “not involving any public offering,” while Section 3(b)(1) authorizes the SEC to create additional exemptions. The SEC adopted Regulation D (“Reg D”) in 1982 to clarify and expand the exemptions available under these two sections. The SEC further expanded Reg D in 2013 following passage of the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”).

Until this year, Reg D included three rules – Rules 504, 505, and 506 – that provided specific exemptions from registration. Rules 504 and 505 exempted certain offerings up to $1 million and $5 million, respectively. Rule 506 spelled out two “safe harbors” – 506(b) and 506(c). If an offering met the conditions of either of Rule 506’s “safe harbors,” it would be deemed a transaction “not involving any public offering” and would be exempt under Section 4(a)(2). READ MORE

Insider Trading Around Private Placements: Was Tom Price’s Investment Down Under Above Board?

On February 10, the Senate confirmed Representative Tom Price (R-GA) as Secretary of Health and Human Services, where he will oversee the U.S. Food and Drug Administration (FDA). His nomination has not been without controversy, including several Senators and a coalition of public interest advocacy groups demanding an investigation into whether Price violated insider trading laws when he invested in an Australian pharmaceutical company last summer.  This highlights some basic precautionary steps that public companies can take when considering private placements.

The company Price invested in, Innate Immunotherapeutics, is working to develop a single product. The company is essentially a bet that the drug will succeed in clinical trials and receive FDA approval.  Price was introduced to the company by Representative Chris Collins (R-NY), who sits on the company’s board and is its largest shareholder.  The introduction was regarding a private placement that Innate was offering to select U.S. investors to raise additional working capital for a clinical trial and to “seek approval from the United States Food and Drug Administration for an Investigational New Drug programme in the United States,” among other purposes.  The private placement was priced at $0.18 USD per share, a 12% discount to the stock’s market price in early June 2016 (the stock is publicly traded on the Australian Securities Exchange).  Even though both Price and Collins sit on committees that oversee the health care and pharmaceutical industries, both invested in the private placement last summer.

President Trump nominated Price to head HHS on November 29, 2016.  By then, Innmate’s share price had risen to $0.58 USD.  The stock peaked at $1.39 USD on January 25, 2016, representing a 670% increase on the congressmen’s investments.  Last Friday, when the Senate confirmed Price, the stock closed at $0.71 USD.

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