October 19, 2020 | Idaho Business Review

Boise Metro Chamber adds J.R. Simplot Co. president, CEO Garrett Lofto to board

The Boise Metro Chamber has added Garrett Lofto, president and CEO of the J.R. Simplot Company, to the Chamber’s Board of Directors. Lofto’s addition will bring the Board of Directors to a total of 31 members, compiled of business executives and CEOs in the Treasure Valley. Directors of the Chamber are responsible for the Chamber’s governance, policy setting, strategic direction, and financial operations. Each member of the Board of Directors serves a three-year term.

Lofto began his career with the J.R. Simplot Company in 1992 and he’s spent his whole career at Simplot, most recently serving as president of the Simplot AgriBusiness division. As president and CEO, he oversees the company’s integrated portfolio that includes phosphate mining, fertilizer manufacturing, farming, ranching and cattle production, food processing, food brands, and other enterprises related to agriculture.

Lofto is the past chairman of the Board of Directors of the Fertilizer Institute and the Nutrients for Life Foundation. He has sat on the Board and Executive Committee of the International Plant Nutrition Institute and is currently on the Board of Directors for the Ronald McDonald House of Charities of Idaho.

Analysis: Where were most COVID-19 job losses in Idaho?

photo of the Eastern Idaho Regional Medical Center — Health care companies were the second-worst hit by job loss in Idaho due to the pandemic. File photo

It’s been well advertised that Idaho has made a remarkable recovery from the economic downturn created by the COVID-19 pandemic, especially in terms of employment.

To gain a snapshot of which industries took the worst hit during the spring lockdown and the summer of the endless weeks at Idaho Rebound Stage Four, we looked at all initial unemployment claims filed with the Idaho Department of Labor between March 15 and Oct. 2. The hands-down loser for the most terminated jobs is the accommodation and food service sector, which should surprise no one. A total of 26,646 initial claims were filed in this sector between March 15 and Oct. 2 in Idaho.

The startling statistic hiding in the numbers is that the health care and social assistance sector took the number two spot for bleeding jobs, with 20,616 initial claims filed. For those paying attention to the health care industry, this is not a surprise. Idaho is actually better off than most other states in terms of how health care has fared to date. Outside of Idaho’s borders, over 20 hospitals have closed this year, already according to the Kaiser Family Foundation. All but one of those was rural.

Unsurprisingly, Retail took the number three spot for jobs lost, with 18,762 initial claims filed.

Many of those who lost jobs have since regained employment, so these numbers really a snapshot of what different sectors suffered during the worst of the lockdown.

Given that there were 2,955 initial claims and 9,144 continuing claims for the week ending on Oct. 3, there is still some lingering unhappiness in the job market. Based on the August unemployment statistics, the unemployment rate is nearly twice of what it was before the pandemic. Despite that comparison, Idaho is still faring much better than most of the nation with an unemployment rate half of the national average of 8.4%.

U.S. Bureau of Labor Statistics Industry Designation	Total Initial Claims Filed in Idaho, March 15 to Oct. 2, 2020
Accommodation and Food Services	26,646
Health Care and Social Assistance	20,616
Retail Trade	18,762
Manufacturing	14,527
Construction	11,065
Unclassified	10,495
Administrative and Support and Waste Management and Remediation Services	10,359
Other Services (except Public Administration)	5,891
Transportation and Warehousing	5,120
Educational Services	4,985
Professional, Scientific, and Technical Services	4,458
Wholesale Trade	4,172
Arts, Entertainment, and Recreation	3,465
Agriculture, Forestry, Fishing and Hunting	1,982
Information	1,900
Public Administration	1,816
Finance and Insurance	1,745
Real Estate and Rental and Leasing	1,615
Management of Companies and Enterprises	318
Mining	229
Utilities	58
Grand Total	150,224

Court declines bid to overturn transgender inmate case

BOISE, Idaho (AP) — The U.S. Supreme Court has declined to hear the state of Idaho’s bid to overturn a case involving a transgender inmate who sued state officials to obtain sex reassignment surgery.

The Court had ruled 7-2 in May that it would not block a lower court’s ruling requiring Idaho to pay for Adree Edmo’s surgery, Boise State Public Radio reported.

Edmo received her surgery in June and was transferred to a women’s prison shortly thereafter, becoming the first transgender inmate in the country to do so through a court order, KBSX-FM reported.

State officials have spent over $450,000 of taxpayer money as of October to fight this case in court.

“The taxpayers of Idaho should not have to pay for a procedure that is not medically necessary,” Gov. Brad Little said in a statement. “From the start, this appeal was about defending taxpayers and I will continue to do so.”

Under consideration was whether the state Department of Correction violated Edmo’s constitutional rights shielding her from cruel and unusual punishment. Lawyers with the state and those representing Edmo also debated whether the surgery was “medically necessary.”

Edmo was diagnosed with gender dysphoria soon after she was sentenced to prison in 2012 for the sexual abuse of a child under 16.

Edmo was later permitted to start hormone therapy, but was kept in a men’s prison and denied sex reassignment surgery. Her lawyers argued that the denial became so unbearable that she attempted twice to castrate herself.

She is scheduled to be released from prison in July 2021.

What changes are there to ‘finders’ who help raise capital?

Coni Rathbone

Jason Powell

Raising capital is one of the most difficult challenges businesses face. It becomes even more challenging if the amount sought (e.g., less than $5 million) is below a level that would attract venture capital or a registered broker-dealer, but beyond the levels that can be provided by friends and family and personal financing.

One of the most frequently asked questions of a Securities Lawyer is if issuers are able to use a finder to help raise capital. A finder is generally a company, service or individual who identifies investors for a financing transaction. Finders usually receive a fee for introducing the parties and generally step away from the transaction after such preliminaries. A finder is different from either the term “broker” or “dealer.”

While the use of finders is widespread, the use of unregistered finders by businesses seeking capital is risky and poses two potential problems. First, a business (issuer) may not rely on a securities exemption if the finder did not strictly follow all applicable requirements for the exemption. Second, the issuer may not be able to use a planned securities exemption if it uses a finder that should be, but is not, registered as a broker. Prior to the proposal identified below, the circumstances allowing the appropriate use of finders was very limited.

On October 7, the United States Securities and Exchange Commission announced a proposal that would offer a non-exclusive and conditional safe harbor exemption from the broker registration requirements for the Securities Exchange Act of 1934 to permit natural persons to engage in certain limited capital raising activities involving only accredited investors (as that term is defined in Rule 501 of Regulation D). This proposal proposes to exempt two classes of finders, Tier I and Tier II, based on the types of activities in which finders are permitted to engage, and with conditions tailored to the scope of activities.

The proposed exemption for either tier of finder would be available only where:

The issuer is not required to file reports under the Securities Exchange Act of 1934;
The issuer is seeking to conduct the securities offering in reliance on an applicable exemption from registration under the Securities Act of 1933;
The Finder does not engage in general solicitation;
The potential investor is an “accredited investor” or the Finder has a reasonable belief that the potential investor is an “accredited investor”;
The Finder provides services pursuant to a written agreement with the issuer that includes a description of the services provided and associated compensation;
The Finder is not an associated person of a broker-dealer;
The Finder is not subject to statutory disqualification at the time of his or her participation.

Tier 1 Finders:

Under the proposal, a Tier 1 Finder is defined as a finder who meets the above conditions and whose activity is limited to providing contact information of potential investors in connection with only one capital raising transaction by a single issuer within a 12-month period, provided the Tier I Finder does not have any contact with the potential investors about the issuer. The contact information may include, among other things, name, telephone number, e-mail address, and social media information. A Tier I Finder that complies with all of the conditions of the exemption may receive transaction-based compensation (e.g. a commission in the form of a percentage of capital raised by the issuer from those potential investors introduced to the issuer by the finder) for the limited services described above without being required to register as a broker under the Securities Exchange Act of 1934.

Tier 2 Finders:

The proposed exemption permits Tier 2 Finders to engage in additional solicitation-related activities beyond those permitted for Tier 1 Finders. Under the proposal, a Tier 2 Finder is defined as a finder who meets the above conditions, and who engages in solicitation-related activities on behalf of an issuer, that are limited to: (i) identifying, screening and contacting potential investors; (ii) distributing issuer offering materials to investors; (iii) discussing issuer information included in any offering materials, provided that the Tier II Finder does not provide advice as to the valuation or advisability of the investment; and (iv) arranging or participating in meetings with the issuer and investor.

A Tier II Finder wishing to rely on the proposed exemption would need to satisfy certain disclosure requirements and other conditions. The Tier II Finder would need to provide a potential investor, prior to or at the time of the solicitation, disclosures that include: (i) the name of the Tier II Finder; (ii) the name of the issuer; (iii) the description of the relationship between the Tier II Finder and the issuer, including any affiliation; (iv) a statement that the Tier II Finder will be compensated for his or her solicitation activities by the issuer and a description of the terms of such compensation arrangement; (v) any material conflicts of interest resulting from the arrangement or relationship between the Tier II Finder and the issuer; and (vi) an affirmative statement that the Tier II Finder is acting as an agent of the issuer, is not acting as an associated person of a broker-dealer, and is not undertaking a role to act in the investor’s best interest.

The proposal contemplates that this disclosure be made orally and supplemented by a written disclosure delivered to the potential investor no later than the date the potential investors invests in the issuer. In addition, the proposal required that a Tier II Finder must obtain from the investor, prior to or at the time of any investment in the issuer’s securities, a dated written acknowledgment of receipt of the required disclosures. A Tier 2 Finder complying with all of the conditions of the exemption would also be able to receive transaction-based compensation.

A finder could not be involved in structuring the transaction or negotiating the terms of the offering. A finder also could not handle investor funds or securities or bind the issuer or investor; participate in the preparation of any sales materials; perform any independent analysis of the sale; engage in any “due diligence” activities; assist or provide financing for such purchases; or provide advice as to the valuation or financial advisability of the investment. The proposed exemption would apply only with respect to the defined activities for each tier of finder and is limited to activities solely in connection with primary offerings.

Additionally, the proposed exemption would not permit a finder to engage in broker activity beyond the scope of the proposed exemption, such as to facilitate a registered offering, a resale of securities, or the sale of securities to investors that are not accredited investors or that the finder does not have a reasonable belief are accredited investors.

The proposal is not yet final and is now subject to a 30-day comment period prior to United States Securities and Exchange Commission finalizing the proposed exemption.

While the enactment of this new proposal would be a major win for issuers, issuers will want to continue to be extremely cautious in their selection of a finder to assist in a capital raise as the failure of the finder to comply with any enacted proposal could still have negative consequences for the issuer. Securities lawyers with be creating finders agreement that incorporate instructions and representations for the finders that they are complying with the provisions, but this will remain the issuer’s risk. As with this and any securities matters, issuers should engage competent securities legal counsel to assist with securities transactions.

Coni Rathbone and Jason Powell are attorneys at Dunn Carney LLP, which recently opened an office in Eagle. Dunn Carney advises businesses and individuals in real estate, Opportunity Zones, business, tax and securities matters, as well as litigation, and estate planning and administration.