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Delivering All Things Crowdfunding and Online Investing

 
September 02, 2014 by Andrew Stephenson
Previously, CrowdCheck has brought readers the message that no securities law violation is too small to bring on SEC enforcement.  It is part of the "broken windows" theory of policing—if you let issuers and brokers get away with the small violations, it sends a message that compliance with securities laws is merely optional.  But what happens if instead of a small violation, the SEC has issued an enforcement order against a financial behemoth, who now is subject to the Bad Actor rule prohibitions on participation in offerings utilizing Rule 506 of Regulation D? Such is the situation that Citigroup now faces.   As a result of the delayed entering into an...
This entry is filed under Bad Actor, Rule 506(b), Rule 506(c), SEC, Securities Law, Blog
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August 29, 2014 by Sara Hanks
Wait, what? You thought intrastate offerings were exempt from federal securities law? Only bits of it. The "intrastate exemption" for offerings made within a specific state is only an exemption from the laws that govern registration with the SEC. There is NEVER any exemption from the antifraud laws. If you use the "jurisdictional means" (eg telephones or the intertubes, even behind a firewall) then any offer or sale of securities is subject to the federal securities antifraud laws (as well as the state laws, which can sometimes be a lot stricter). And as we've discussed in the past, "fraud" in securities law land is a lot broader than running away with the...
This entry is filed under Crowdfunding, Fraud, Securities Law, Blog
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August 28, 2014 by Andrew Hanks
Website and Registration: http://www.lexvid.com/cle/securities-crowdfunding-cle Description: The JOBS Act recently paved the way for securities crowdfunding - that is, when a large number of investors make small investments in companies via online portals. Once implemented, securities crowdfunding will revolutionize the way small businesses and start-ups acquire capital. This program explores the new rules, and delves into the potential impact on campanies and investors. Among the key issues discussed are investor limits, exemptions, safe harbors, intermediaries, disclosures, and advertising. The speakers also provide a wealth of guidance to attorneys in...
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August 26, 2014 by Andrew Hanks
Washington Business Journal takes a look at CrowdCheck's place in the securities and crowdfunding industry. How CrowdCheck shrugged off the JOBS Act's long crowdfunding delay http://www.bizjournals.com/washington/blog/techflash/2014/08/how-crowdcheck-shrugged-off-the-jobs-acts-long.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+bizj_washington+(Washington+Business+Journal)&page=2
This entry is filed under In The News, Blog
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July 24, 2014 by Sara Hanks
Here's another sad story from our "fail files" although it has a happy ending. Entrepreneurs seeking outside investment may have seen references in subscription agreements (the agreements in which the investors agree to invest in the company and the company agrees to sell them shares or notes) to "being in good standing". This means being properly incorporated under the laws of a state and being up to date with the payment of franchise fees, or whatever the state calls its annual fees. Paying annual fees to a state may not seem like a big deal, and sometimes the bill from the state gets set aside, or the company doesn't have the funds to pay a few hundred bucks...
This entry is filed under Due Diligence, Failure, Securities Law, Blog
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July 16, 2014 by Andrew Hanks
http://bit.ly/1r4kIwm   THE STATE OF JOBS ACT CROWDFUNDING AND WHAT ENTREPRENEURS NEED TO KNOW   Equity and debt-based crowdfunding in the U.S. is partially up and running. President Obama signed the Jumpstart our Business Startups (JOBS) Act in April 2012, but the Securities and Exchange Commission (SEC) has not fully implemented all of its provisions. While many entrepreneurs and members of the crowdfunding community await final regulations governing Title III of the JOBS Act, which allows non-accredited investors to participate in crowd investing, an increasing number of entrepreneurs and businesses are benefitting from Title II crowdfunding (accredited...
This entry is filed under Crowdfunding, Fraud, In The News, SEC, Blog
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July 14, 2014 by Andrew Stephenson
Since March, when CrowdCheck first put together a summary of intrastate crowdfunding exemptions, there has been a significant amount of activity by various states to ease the regulatory process for companies to offer securities through the use of the intrastate exemption to SEC registration.  The following two charts were produced as a collaboration by CrowdCheck, Anthony Zeoli, Esq. of Ginsburg Jacobs LLC, and Georgia Quinn, Esq. of Seyfath Shaw LLP.   Summary of Enacted Intrastate Crowdfunding Exemptions   Summary of Proposed Intrastate Crowdfunding Exemptions
This entry is filed under Crowdfunding, SEC, Securities Law, Blog
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June 11, 2014 by Andrew Stephenson
In recent months, a lot of excitement has built up surrounding the enactment and use of intrastate crowdfunding exemptions as an alternative to waiting for the SEC to finalize Regulation Crowdfunding at the federal level.  Presently, at least thirteen states have introduced or enacted some form of exemption from state regulation for intrastate crowdfunding offerings.  These exemptions allow companies to sell securities in offerings exempt from SEC registration through making notice filings with their respective state securities commissions rather than following the standard intrastate practice of “qualifying” the offering with state regulators.  The exemptions...
This entry is filed under Bad Actor, Crowdfunding, Rule 506(c), SEC, Securities Law, Blog
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May 23, 2014 by Sara Hanks
How’s that for a title for a senior thesis at a liberal arts college? Point is, though, that there is no crowd in crowdfunding. There’s not one crowd but many crowds, and whether securities crowdfunding is going to work as expected depends which crowd shows up on any given day. Advocates of securities crowdfunding long argued that the wisdom of the crowd would expose and prevent fraud. We don’t think that always works; the most notorious exposures of fraud in donation/rewards campaigns so far have been effected by journalists, not the crowd, and as we’ve pointed out for a long time, misleading statements or false promises are also “fraud” and we are seeing the...
This entry is filed under Crowdfunding, Fraud, Blog
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May 05, 2014 by Andrew Stephenson
As many in the crowdfunding space are now well aware, the Washington State Attorney General has brought a case against the sponsors of the Asylum Playing Card Kickstarter campaign.  The lawsuit alleges the campaign made misrepresentations to project backers that constitute "unfair or deceptive acts in trade or commerce".  The basic facts alleged by the state are that Altius Management, a Nashville, TN based company, raised $25,146 from 810 project backers through a Kickstarter campaign for its Asylum Playing Cards that closed on October 31, 2012.  The campaign indicated that delivery of the playing cards was estimated to be around December 2012.  The Attorney...
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