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Answering PIPE FAQs with Joshua D. Brinen

May 12, 2022 | Securities

What is a PIPE?

A PIPE is the unregistered sale of securities to select investors. Usually accredited investors of the shares of a public entity. Shares sold in a PIPE may not be freely traded immediately after purchase. The shares sold in a PIPE may need to either be held for a minimum period under Rule 144 or may be registered in a subsequent registration statement.

What is a registration statement?

A registration statement is a form filed with the Securities and Exchange Commission. A registration statement registers certain securities with the Commission. Registered securities may be traded without an exemption from registration. In the context of a PIPE, a registration statement is expressly designed to register the shares purchased in the PIPE. Those registered shares in the hands of the accredited investors may then be traded publicly or privately without an exemption from registration.

What documents do I need to sell in a PIPE?

A PIPE is the unregistered sale of securities to accredited investors. In order to sell under a PIPE, we would recommend that you have a private placement memorandum. A private placement memorandum will detail the business of the company, what is being offered, and the risks that the accredited investor may be subject to in the purchase of the unregistered securities. In addition to the private placement memorandum or PPM, you will need a subscription agreement.

A subscription agreement is a bundle of documents that allows a potential investor to purchase or subscribe to the PIPE. Part of that subscription agreement will be a securities purchase agreement. The securities purchase agreement is the agreement that transfers and exchanges money for the shares or securities. In addition, you will need an investor questionnaire. An investor questionnaire is a document by which the accredited investor describes how they are accredited. An accredited investor is a standard set forth by the Securities and Exchange Commission and is updated periodically.

Being an accredited investor basically means that you can suffer the risk of complete loss of the investment. In addition to the subscription agreement, the Securities Purchase Agreement, and the investor questionnaire, you may be subject to anti-money laundering requirements, which would require you to prove where the money was obtained to purchase the securities. There will also be other possible agreements, including a warrant agreement, possibly a registration rights agreement, and possibly operating agreements or shareholder agreements.

What is a Registration Rights Agreement?

A registration rights agreement is often entered into between the accredited investor in a PIPE and the company. Registration rights agreements ensure that the accredited investor will be able to have the securities purchased under the PIPE registered with the Securities and Exchange Commission. The company has the primary responsibility to file that registration statement. Registration rights agreements come in two flavors. The first flavor is a tag-along agreement. A tag-along registration rights agreement allows an accredited investor to tag along on a subsequently filed registration statement. A drag-along registration rights agreement allows an accredited investor to force the company to file a registration statement to register the securities purchased in the PIPE.

What do I need to file with the SEC to register a PIPE?

A private investment and public entity is not registered with the Securities and Exchange Commission. However, as an unregistered sale of securities, it is advisable for the company to file a Reg D filing with the Securities and Exchange Commission, a Reg D filing would be in the form of Form D. It is available on the SEC’s website and you can file it online.

Contact a Skilled Securities Attorney

Brinen & Associates advises clients regarding their options and remedies for a wide variety of securities matters. Call (212) 330-8151 or send us a message to schedule a consultation. 


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I formerly worked as a satellite employee from my home state of New Jersey. I ended my employment with my former employer in 2016. In 2018, I was sued by my former employer for $1.1 million in Illinois State Court. I was referred to Brinen & Associates, LLC by a friend who is a client of the firm. Brinen & Associates, LLC came highly recommended. I contacted Joshua Brinen and then had a consultation at his office with his colleague Mark White. Together, Messrs. Brinen and White explained my options...

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