PPs and blackout periods I just posted this chat gpt responses to the Laurion reddit thread regarding PPs (legality) during potential transaction negotiations and the length of black out periods. Basically there's no set rules and timelines for blackouts and PPs during negotiations... however companies may be subject to legal and regulatory scrutiny by failing to address. I assume US and Canadian laws are similar
"The typical duration of a blackout period for a publicly traded company before announcing a deal or transaction can vary, but it generally ranges from a few weeks to a couple of months prior to the announcement.
Key factors influencing the duration include:
1. **Type of Transaction**: Major transactions like mergers or acquisitions may necessitate longer blackout periods to ensure confidentiality and compliance with insider trading regulations.
2. **Company Policies**: Each company may have its own internal policies regarding blackout periods, often set to safeguard against leaks and maintain fair trading practices.
3. **Regulatory Considerations**: Companies must also comply with securities laws, which may require a blackout period to prevent the disclosure of material nonpublic information.
Typically, companies will formally establish blackout periods around key events, ensuring that executives and employees refrain from trading the stock until the announcement is made.
In the context of a publicly traded company, private placements during advanced or exclusive transactional negotiations must adhere to various securities laws and regulations. Key considerations include:
1. **Regulation D**: Most private placements rely on Regulation D exemptions, particularly Rule 506, which allows companies to raise capital without registering with the SEC, provided certain conditions are met, such as the nature of investors (accredited vs. non-accredited).
2. **Material Nonpublic Information**: If negotiations are advanced, any information shared with potential investors may constitute material nonpublic information. Companies must ensure that they do not violate insider trading laws by disclosing such information.
3. **Disclosure Obligations**: Public companies have ongoing disclosure obligations. If a private placement occurs while negotiations are ongoing, the company must consider whether to disclose the transaction in public filings, especially if it materially affects the company's financial position.
4. **Market Impact**: Executing a private placement during significant negotiations can affect the stock price, leading to scrutiny from regulators.
5. **Legal and Regulatory Compliance**: It's crucial for companies to consult legal counsel to navigate these complexities and ensure compliance with SEC regulations and state securities laws.
In summary, while private placements are permissible, they require careful consideration of legal obligations and the timing of disclosures to avoid potential pitfalls."