It has become common knowledge among those of us involved in PIPE financings that the SEC has recently changed its views with respect to these financings and Rule 415.  The issue is a fairly technical one, and centers around whether or not equityline or convertible debenture financings where the investor doesn't put up the money until after the registration statement is effective are primary or secondary offerings. 

Historically, these have been considered secondary offerings, and the registration statement covered the resale of the common stock by the investor into the public market.  Secondary offerings can be done pursuant to Rule 415.  However, recently, the SEC has indicated that they may consider these to be primary offerings in some cases.  The problem from a practioner's point of view is that there is no clear and definite guidance from the SEC.  The last we heard, and I am told by a fellow practioner that this was put in writing in the form of SEC comments to a registration statmeent, that if the number of shares being registered represents less than 20% of the issued and outstanding common stock of the issuer, then the SEC will consider it to be a secondary offering.  We know that registering a number of shares greater than the outstanding is going to be considered a primary offering.  Where is the line between 20% and 100%?  Stay tuned........

Update:  As of January 2007, we understand the threshhold to be 1/3 of the pre-transaction FLOAT, and we further are aware of no Rule 415 limitiation in a traditional resale of common stock purchased by investors in a private placement.