Patrick S. Bryant Interviewed by Law 360 on his Securities Practice

Q&A With Robinson Bradshaw's Patrick Bryant

Law360, New York (June 03, 2013, 2:30 PM ET) -- Patrick S. Bryant is a shareholder in Robinson Bradshaw & Hinson PA's Charlotte, N.C., office. He practices in the areas of securities, mergers and acquisitions, government and internal investigations and general corporate law. He represents public and private companies in a variety of financing and corporate transactions, including public and private equity and debt securities offerings, public and private mergers and asset acquisitions and dispositions. Bryant also regularly advises public companies and their independent directors on a wide range of matters, including securities disclosure and regulation, Sarbanes-Oxley and Dodd-Frank compliance, corporate governance and internal investigations and general business matters.

Q: What is the most challenging case you have worked on and what made it challenging?

A: My most challenging matter was one that ultimately was never consummated. It involved a deliciously complicated corporate reorganization and related capital markets transaction with more than the usual cast of characters. Just navigating the ups and downs of the markets to execute a transaction is often challenging enough, but this one faced the added complexity of regulatory, political and public relations headwinds.

Each counterparty had a different agenda, and attempting to satisfy each of them was like trying to squeeze a balloon on one end without creating a bulge on the other. After an incredible and protracted effort by our entire team to bring the deal together, we discussed the situation with our client who concurred it was time to walk. As disappointing as that decision was, we knew it was the right move for our client. Although these outcomes do not make the highlight reel or burnish a legal resume, they are often the best counsel you can provide.

Q: What aspects of your practice area are in need of reform and why?

A: The ability of securities regulation and enforcement resources to deal with evolving and increasingly sophisticated technology continues to be a challenge. One example is trading activity, where regulators struggle to keep up with the speed and sophistication of computerized trading and relatively small timing and information differentials that certain traders can exploit. Regulators continue to make technological strides of their own, as evidenced by the SEC’s move to freeze assets of a Swiss trading account just a day after the announcement of the sale of Heinz based on suspicious advance trading activity.

Another initiative that may help is the SEC’s recently adopted rule requiring national securities exchanges and FINRA to develop a “consolidated audit trail” to track each order in the U.S. securities markets through its entire life cycle. Compromises made in the final rule, such as dropping the requirement that the relevant trading data be reported on a real-time basis, and the inevitable resource gap between the regulators and the regulated, suggests an ongoing arms race where the biggest and most sophisticated market participants may always have the upper hand.

Q: What is an important issue or case relevant to your practice area and why?

A: The JOBS Act, adopted last year, directed the SEC to topple one of the long-standing pillars of private offering regulation: the ban on “general solicitation and advertising” in private offerings under a popular federal exemption (Rule 506 under Regulation D). Examples of general solicitation included in SEC rules written over 30 years ago do reflect a simpler time, with mentions of magazine and newspaper ads, as well as TV and radio broadcasts. If this were an exclusive list, the death of newspapers and the advent of DVRs and commercial-free satellite radio might save an overly zealous stock promoter from stepping into a legal pothole.

But fast-forward the general solicitation ban to current common methods of communication, as the SEC has done by interpretation, and you can see how big the pothole has become: mentioning your stock offering on an unrestricted website, sending a blast email or tweeting about it can sully your otherwise “private” Rule 506 offering, regardless of who buys the stock. The JOBS Act’s compromise was to say that we don’t care how broadly you cast your net, as long as you haul in only “accredited investors” — the same universe of purchasers to which existing Rule 506 offerings are limited as a practical matter.

Proponents say lifting the ban is a sensible and modest measure that more appropriately reflects the reality of today’s all-access means of communication and would likely facilitate additional activity under exemptions that accounted for nearly $1 trillion in estimated annual private capital raises in each of 2011 and 2010. Critics argue lifting the ban will lead to abuses on both sides of a largely unregulated private investment market, with newly solicited investors misrepresenting their credentials or getting in over their heads, and unscrupulous issuers being able to access more investors to defraud without the usual safeguard of a preexisting relationship.

Lifting the ban has proved a particularly hard swallow for regulators, as the SEC finally issued a proposed rule in late August, nearly two months after the JOBS Act required a final rule, which has still not been issued despite continued congressional charges and some evidence of SEC foot-dragging. The ban continues to apply until the SEC issues its final rule: if you’re an issuer, don’t rent that billboard for your offering just yet.

Q: Outside your own firm, name an attorney in your field who has impressed you and explain why.

A: Norfleet Pruden of K&L Gates (formerly Kennedy Covington) in Charlotte, N.C., has always impressed me. Back when I was cutting my teeth as a junior lawyer on securities transactions, Norfleet was often the lead counsel for our client’s counterparty to the transaction — usually an issuer or an underwriter.

Norfleet was the consummate professional, with a great mix of smarts, client skills and practicality. He also would not hesitate to roll up his sleeves and focus on the details when needed. Some of my fondest memories of working with Norfleet were seeing him cross swords with an equally strong-willed grammarian and leader from our firm about the wording or punctuation of a sentence or clause in the prospectus. The ability to see the big picture and sweat the details are often mutually exclusive traits, but not with Norfleet. He’s also just a very nice person and pleasant to work with.

Q: What is a mistake you made early in your career and what did you learn from it?

A: Back when securities lawyers used to go to the financial printer to work on offerings, I spent a couple of late nights at the printer working with a group on a secondary offering for a good client. It seemed like we had read through and edited the prospectus at least 10 times to make sure everything was right. Late in the night, we gave final signoff and authorized the printer to print the books for delivery the next day. I went home tired, but happy and anxious to catch a few hours of sleep. The next morning when I called my friend at the printer to ask about delivery of the books, he assured me that they would be delivered on time. Then he said, as if in passing, “By the way, we turned that logo over for you.”

Only then did I realize to my horror that, despite all that checking, we had cleared the book to print with the cover logo upside down. In the interest of full disclosure, I would tell you that this was one of the easier logos on which to make this mistake—a single circle containing the company’s initials in an unusual, swirling cursive font. Nonetheless, it was a big mistake, and I’ll be forever grateful to my friend at the printer who caught it.

Here were my takeaways from the experience: (1) carefully check and re-check your work product; (2) despite adherence to step (1), mistakes will still occasionally happen; (3) surround yourself with a good team, top to bottom; and (4) be kind and respectful to everyone on the team, regardless of their role or rank. Not only is it the right thing to do, but you never know when you are going to need that extra bit of help; and how you treat people may well determine whether or not you get it.

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