What Investors Should Be Told About the Use of Proceeds
The “Use of Proceeds” section is one of the most important—and most frequently overlooked—parts of a securities offering. It tells investors exactly how a company intends to use the capital it raises and provides insight into management’s priorities, financial condition, and strategic direction.…
What this episode covers
The “Use of Proceeds” section is one of the most important—and most frequently overlooked—parts of a securities offering. It tells investors exactly how a company intends to use the capital it raises and provides insight into management’s priorities, financial condition, and strategic direction.…
- The “Use of Proceeds” section is one of the most important—and most frequently overlooked—parts of a securities offering.
- It tells investors exactly how a company intends to use the capital it raises and provides insight into management’s priorities, financial condition, and strategic direction.
- Lehrer explains why generic disclosures such as “working capital” or “general corporate purposes” often fail to give investors meaningful information.
- Inside Securities Law is hosted by securities attorney Frederick M.
- Lehrer and examines the legal, regulatory, and practical issues that shape capital formation, SEC compliance, securities offerings, corporate governance, and investor protection.
Full Transcript
The “Use of Proceeds” section is one of the most important—and most frequently overlooked—parts of a securities offering. It tells investors exactly how a company intends to use the capital it raises and provides insight into management’s priorities, financial condition, and strategic direction.
In this episode, securities attorney Frederick M. Lehrer explains why generic disclosures such as “working capital” or “general corporate purposes” often fail to give investors meaningful information. He discusses how companies should disclose debt repayment, insider compensation, litigation costs, operating losses, acquisitions, research and development, and other planned uses of offering proceeds while avoiding both misleading omissions and false precision.
The discussion also covers minimum-maximum offerings, management discretion to reallocate capital, consistency throughout the offering document, board oversight, and when changing circumstances may require additional disclosure.
Whether you’re an issuer, investor, founder, executive, or securities professional, understanding the Use of Proceeds section is essential to evaluating both regulatory compliance and management credibility.
Topics covered:
About the series
Inside Securities Law is hosted by securities attorney Frederick M. Lehrer and examines the legal, regulatory, and practical issues that shape capital formation, SEC compliance, securities offerings, corporate governance, and investor protection. Each episode provides practical guidance for companies, boards, founders, investors, and legal professionals navigating today’s securities landscape.
This transcript is published for general information only. It is not legal advice, and listening to or reading it does not create an attorney-client relationship.
Authoritative Sources
- SEC Enforcement Manual, Division of Enforcement — U.S. Securities and Exchange Commission
- SEC Division of Enforcement — Litigation Releases — U.S. Securities and Exchange Commission
- 17 C.F.R. Part 240 — General Rules and Regulations, Exchange Act — Electronic Code of Federal Regulations
- SEC EDGAR — Full-Text Search of Company Filings — U.S. Securities and Exchange Commission
- Securities Act of 1933 (15 U.S.C. §§ 77a et seq.) — U.S. Government Publishing Office
- Securities Exchange Act of 1934 (15 U.S.C. §§ 78a et seq.) — U.S. Government Publishing Office
Primary sources are cited so readers can verify the law directly. Rules and staff guidance change; see our editorial and corrections policy to report an error or an outdated citation.