Hoof Beats Magazine

DEC 2017

Official magazine of the U.S. Trotting Association, covering harness racing and the Standardbred horse.

Issue link: https://hoofbeats.epubxp.com/i/904258

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Page 112 of 141

brokerage statements, credit reports, and the like. If your fractional racing ownership offering qualifies for an exemption un- der Rule 506, you will still need to file a Form D with the SEC within 15 days of the date of sale of the securities. Form D is a brief notice filing that includes some details about the offering and the offeror, such as the name and contact informa- tion of the company's officers and direc- tors, but it contains little other informa- tion about the company. Note that purchasers receive "restrict- ed securities" in a Rule 506 exempt offer- ing, meaning that certain conditions must be met if a purchaser later desires to sell a fractional racing interest. As mentioned above, you will also need to consider the requirements for an exemption under state law. A particular offering may be exempt under the Act, but not necessarily exempt under state law. For example, among several regis- tration exemptions, the State of Ohio ex- empts the sale of securities to 10 or fewer Ohio residents who are purchasing for investment purposes. There is no limit to the amount of money that can be raised, but general advertising is not permitted. Ohio also exempts transactions that com- ply with Rule 506, described above, but a Form D must be filed with the Ohio Di- vision of Securities within 15 days of the date of sale in Ohio, along with a filing fee of $100. This is only one example; ev- ery state in which potential new owners reside has its own laws and regulations. Our primary message bears repeating: if you are issuing fractional interests in a racehorse or stable, you should seek legal advice to determine whether your offer- ing meets any applicable federal and state exemption requirements. An attorney who is experienced in securities regula- tion can help you structure your offering to meet an exemption and complete the necessary documentation while, at the same time, satisfying investors' concerns about their financial privacy. Ongoing Requirements: Resale Rule 144 under the Act provides the most commonly used "safe harbor" for inves- tors to sell restricted securities. It has sev- eral conditions, including a six-month or, in some cases, a one-year holding period. In addition to SEC requirements regard- ing resale, an issuer may impose contrac- tual restrictions at the time of investment that may prevent free transfer of the frac- tional interest. It would be important to make sure that investors know about re- strictions on sale. A well-drafted purchase agreement could spell this out, along with a host of other points adding up to a complete and useful understanding among new own- ers, old owners, the trainer, and the pro- moter of the fractional-ownership stable. Conclusion Fractional ownership is a great way to get new people involved in racing without re- quiring a large, open-ended investment. Securities law compliance is just another aspect of good business planning that should not be an unexpected obstacle for any responsible enterprise. Russell C. Williams is president of the United States Trotting Association. y To comment on this story, email us at readerforum@ustrotting.com. HOOF BEATS DECEMBER 2017 111 USTA District Meeting Dates 2017/2018 Schedule *Nominating **Receipt Petitions of Ballot District Day/Date Place Postmark Deadline Deadline #1 Sat., Jan. 13, 2018 Doubletree Columbus-Worthington, Columbus, OH Nov. 24, 2017 Jan. 9, 2018 #2 Sat., Oct. 7, 2017 Northville Downs, Northville, MI Aug. 18, 2017 Oct. 3, 2017 #3 Sun., Jan. 7, 2018 Hilton Arden West, Sacramento, CA Nov. 18, 2017 Jan. 3, 2018 #4A Sat., Jan. 13, 2018 Adventureland Inn, Altoona, IA Nov. 24, 2017 Jan. 9, 2018 #4B Sat., Jan. 27, 2018 Howard Johnson Plaza Hotel, Madison, WI Dec. 8, 2017 Jan. 23, 2018 #5 Sat., Jan. 20, 2018 Poe's Catering on the Hill, Springfield, IL Dec. 1, 2017 Jan. 16, 2018 #6 Sat., Oct. 7, 2017 The Red Mile Clubhouse, Lexington, KY Aug. 18, 2017 Oct. 3, 2017 #7 Sat., Jan. 13, 2018 Bedford Springs Omni Hotel & Resort, Nov. 24, 2017 Jan. 9, 2018 Bedford, PA #8 Sun., Nov. 19, 2017 Saratoga Casino & Raceway, Saratoga, NY Sept. 30, 2017 Nov. 15, 2017 #8A Sat., Jan. 20, 2018 Good Time Room, Yonkers Raceway, Dec. 1, 2017 Jan. 16, 2018 Yonkers, NY #9 Sat., Jan. 20, 2018 Le Club Calumet, Augusta, ME Dec. 1, 2017 Jan. 16, 2018 #11 Fri., Dec. 1, 2017 Harrington Raceway & Casino/Gold Room, Oct. 12, 2017 Nov. 27, 2017 Harrington, DE #12 Fri., Oct. 13, 2017 Freehold Raceway, Freehold, NJ Aug. 24, 2017 Oct. 9, 2017 * Article 4.02(a) "Nomination for Director shall be made by filing a written petition signed by at least 25 voting members from his district to be filed at the Main Office of the Association at Westerville, Ohio, at least 50 days be- fore the election. Nominating petitions forwarded by mail shall be by registered mail, return receipt requested, and shall be considered filed as of the postmark date. All others shall be considered filed at the time they are actually received at the Main Office of the Association..." ** Article 4.02(f) "...the deadline for receipt of ballots...shall be four days prior to the Annual District Meeting." In accordance with Article 4.02, the Certified Public Accounting Firm is determined to be Plante & Moran, PLLC, 250 South High Street, Suite 100, Columbus, Ohio 43215.

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