This past week, the New York Attorney General (the NYAG) published a new guidance document advising that effective January 1, 2018, all amendment submissions for offering plans, excluding price change only amendments, must include a current M-10 Broker-Dealer Registration Statement (M-10), or evidence thereof. New York General Business Law (GBL) § 359-e requires broker-dealers of real estate securities to maintain a current M-10 while engaging in sales activity. This recent policy change shows that the NYAG takes the position that extending the terms of an offering plan by filing an amendment generally evidences a broker-dealer’s intent to engage in sales activity and, accordingly, a broker-dealer must have a current M-10 to substantively amend an offering plan. Failure to do so may be construed by the NYAG as a violation of the GBL.
Generally, pursuant to GBL § 359-e(3)(c), broker-dealer registration statements must be filed every four (4) years plus an additional ninety (90) days following the end of the four-year period. The duty to file and track the status of the M-10 lies solely with the broker-dealer. Submitters should note that their broker-dealer registration status can be requested here, and M-10 and M-3 forms can be accessed here.
What is clear from the new NYAG guidance is that the office deems the information contained in the M-10 form important to investors and will not tolerate delinquent filers. To ensure that an amendment submission is not rejected by the NYAG, it is required that a current M-10 be submitted simultaneously with the amendment submission. A submitter should also (i) disclose in the attorney transmittal letter the submission of the new M-10 using a bold-faced font, and (ii) include a separate check for the M-10 filing fee (in addition to the amendment filing fee). If a submitter’s M-10 is current at the time of amendment submission but neither the copy of the current M-10 nor the M-10 receipt is available, the amendment submission must include an affidavit attesting to the filing date of the submitter’s current M-10.
The new guidance also makes clear that the broker-dealer registration requirements are not limited to this new amendment submission requirement. M-10 requirements in connection with other types of submissions (e.g., offering plans and applicable cooperative policy statements), remain unchanged. Sponsors and developers should refer to NYAG regulations, relevant guidance documents and your Nixon Peabody LLP attorney for specific information regarding such submissions. Nixon Peabody LLP will also assist its developer clients in meeting these requirements as well as tracking compliance therewith.
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.