New York blue sky filing requirements modified due to COVID-19 outbreak

March 31, 2020 | By Patrick T. McCloskey

On March 24, 2020, the Investor Protection Bureau of the New York State Attorney General’s Office published a Notice of Coronavirus Conditional Relief and Limited Service Continuity Plan announcing, among other things, certain changes to New York’s blue sky filing requirements and anticipated correspondence delays due to disruptions caused by the COVID-19 outbreak.

For issuers conducting private placements within or from New York, an electronic copy of any Form 99 or
Form M-111 must now be transmitted by email in accordance with the published announcement. This new requirement is in addition to, and not in lieu of, the existing requirement that a paper copy be mailed with a check or money order for payment the applicable fee.

The email transmitting the electronic version of the applicable filing must include a copy of the front and back of the check being mailed to pay the filing fee, as well as a certification that the sender will cause the paper filing and payment to be mailed “forthwith.” The paper filing should include a printed copy of the cover email transmitted with the electronic filing.

The electronic copy of the filing may be redacted so that only the last four digits of any social security number, or any other sensitive personal identification number, are legible.

Although the announcement grants a 90-day extension for certain filings required under Section 359-e of the New York General Business Law (“GBL”), this extension does not apply to initial blue sky filings for private placements. As a result, any issuers filing a Form 99 or Form M-11 for a private placement should make the applicable filing electronically before any offer or sale in New York State, in accordance with Section 359-e of the GBL.

Since the announcement only references electronic filings with the Investor Protection Bureau, filings of the State Notice and Further State Notice in connection with any private placement should continue to be mailed to the Department of State in Albany in accordance with the instructions of such form(s), together with the applicable fee(s).

For issuers seeking an exemption under Section 359-f[2] of the GBL,2 the same electronic filing requirement applies (again, in addition to, not in lieu of, the paper filing requirement), but the email address for the electronic transmission is different from the email address for Form 99s and Form M-11s, as specified in the announcement. The electronic transmission of the Notice of Appearance Form for such exemption requests must be scanned in a separate pdf file from the rest of the application. Since the announcement expressly indicates that all registration filers “should expect significant delays in correspondence with the Investor Protection Bureau,” any issuer seeking an exemption for a proposed transaction should be prepared for a lengthy delay. Unlike Form 99s and Form M-11s, which are effective upon receipt by the Investor Protection Bureau (if such filings are complete), exemptions are not effective until granted via a letter of notification.

The announcement states “[t]he Department of Law and the IPB will continue to consider other steps that can be taken to facilitate electronic filing and payment,” so it is possible the procedures may change again.

The announcement also makes it clear that it has no impact on the antifraud provisions of the Martin Act or the Investor Protection Bureau’s enforcement activity. The New York Attorney General’s Office recently issued a press release warning New Yorkers of scams related to the federal stimulus packages recently enacted in response to the COVID-19 outbreak.

Note that this alert only addresses the filing procedures for blue sky filings with the Investor Protection Bureau in connection with a private placement of securities. The announcement includes relief and modifications for other registrations and filings, so affected parties are encouraged to review the announcement carefully and, if necessary, consult with legal counsel.

The New York State Attorney General’s Real Estate Finance Bureau published a similar announcement on March 25, 2020.


1 Form 99s and Form M-11s are filings for, among other things, issuers offering or selling securities within or from New York, to the extent (i) the applicable issuer is a “dealer” as defined in Section 359-e[1](a) of the New York General Business Law (the “GBL”) and (ii) there is no applicable exemption under Section 359-f of the GBL. The Form 99 is used for offerings of “covered securities” (as such term is defined in Section 18(b) of the Securities Act of 1933, as amended (the “1933 Act”)), while the Form M-11 is used for offerings of securities that are not covered securities. New York’s blue sky laws are unique in the sense that issuers of their own securities are deemed to be “dealers” of their own securities, unless excepted from that definition under Section 359-e[1](a) of the GBL.

2 The exemptions under Section 359-f[2] include “(d) securities which are to be sold in a limited offering to not more than forty persons, but the attorney general may grant an exemption for offerings made to more than forty persons when he deems such an exemption within the purposes of this subdivision” and “(e) securities issued in connection with an employees’ stock purchase, savings, pension, profit-sharing, or similar benefit plan.”

This blog post is for general informational purposes only and does not constitute legal advice. No one should rely on the information in this blog post without seeking appropriate legal, accounting, tax or other appropriate advice from an attorney, accountant or other professional properly licensed in the applicable jurisdiction(s).