10.8. Integration

An issuer wishing to conduct multiple offerings must be careful that the offerings do not end up being integrated. Integration occurs when the SEC decides that two or more offerings are really a single offering. Offerings are more likely to be integrated if they occur close together, appear to have a similar purpose, are both part of a single plan of financing, or if one offering’s marketing is likely to lead investors to invest in the other offering. (When marketing efforts blur together like this, the offering is said to condition the market for the other offering.)

Integration is a concern whether the offering is exempt, or it goes through the normal SEC registration process for public offerings. (In this section, we'll refer to these as registered offerings to distinguish them from public offerings carried out under a Regulation A exemption.) If the SEC decides that multiple exempt offerings are really a single offering, then the combined offering must meet all of the conditions of a single exemption, or the offering will lose its exempt status. Similarly, if a registered offering is integrated with another offering, then the combined offering will not match the information disclosed in the registration statement, which means the offering cannot go forward. In addition, there may be consequences for the registered persons involved.

Historically, the rules around integration of offerings have been very complicated. In 2021, the SEC attempted to simplify the question of when issuers and underwriters need to worry about integration by publishing Rule 152. This rule offers several safe harbors against integration, as well as clarifying language about how to avoid integration if no safe harbors apply. Recall that a safe harbor is a provision that spells out specifically how to avoid some negative consequence, such as the integration of offerings. Safe harbors are sometimes created when an area of the law is so complicated or open to i