Delivering All Things Crowdfunding and Online Investing
November 13, 2013 by Brian Knight
We often talk about how due diligence can help protect investors from fraudulent investments, but it is important to mention that properly done due diligence can also protect every other party to a sale of securities. An example of this is going on now in Canada. As reported by JD Alois in this excellent article on Crowdfund Insider, a Canadian company, GXP Technologies, finds itself accused of fraud in its effort to “kickstart” the LUCI lucid dream inducer. The company for its part denies the allegations and claims that the crowd has been stirred into a frenzy by a rival. It also has canceled its very successful campaign (about $400,000 raised on a goal of...
November 06, 2013 by Andrew Hanks
Watch our joint webinar with Earlyshares to help you better understand the recently released proposed rules for securities crowdfunding.
November 05, 2013 by Andrew Stephenson
One area of Title III of the JOBS Act that was rather vague was the ability of a company to offer securities through an offer relying on Regulation D at the same time as a crowdfunding offer. The statute was ambiguous on the matter, with provisions that were contradictory. The SEC cleared up the ambiguity and made a clear declaration that, under the proposed rule, "[a]n issuer could complete an offering made in reliance on Section 4(a)(6) that occurs simultaneously with ... another exempt offering." Of all the provisions of the proposed rule, this one may have the most impact on early-stage companies. This provision will allow companies to continue to focus...
November 04, 2013 by Andrew Hanks
Delamaide: Crowdfunding rules help investors http://usat.ly/1fezY2x
October 30, 2013 by Andrew Hanks
The Suit Magazine - Defeating Crowdfunding Fraud http://bit.ly/1cqGxS7
October 30, 2013 by Sara Hanks
Not everyone outside CrowdCheck HQ has finished reading the SEC’s 6,000 page proposals for securities crowdfunding yet. So they may not have picked up on the fact that yes, indeed, crowdfunding portals would be able to charge commissions to companies raising money on their platforms under the proposals. (And although the SEC hasn’t said it, they will probably be able to receive those commissions in dollars, bitcoin or UberKittens.) So as soon as securities crowdfunding is legal, funding portals will be able to compete with broker-dealers with respect to this important aspect of their business plans.
October 28, 2013 by Sara Hanks
The SEC’s proposals for crowdfunding are out, and entrepreneurs are getting advice about how to be ready for securities crowdfunding. One good piece of advice is to start building that crowd now. Another piece of advice that is sometimes omitted? Do not tell the crowd that you will be pursuing crowdfunding. See, telling people that you are going to be raising funds is an “offer” of securities, and offers have to be registered with the SEC unless an exemption from registration is available. There WILL be an exemption from registration for offers of securities when Regulation Crowdfunding is finalized and adopted. It isn’t available yet. So remember the first...
October 23, 2013 by Brian Knight
So did you watch the live feed of the SEC meeting discussing the proposed crowdfunding rules? We did. Fascinating stuff. Of course this is just the start; now we wait for the proposals and will analyze them here. In the mean time remember: you can't seek investment via crowdfunding yet, the rules aren't final, if you try you will get in trouble. What you can do is read the proposals and submit comments to the SEC on the proposals, which is something all of the commissioners heartily welcomed.
October 18, 2013 by Huiwen Leo
Fraud – lots of people talk about it, but what is it? Many in the crowdfunding world see it as a bad guy running away with your money, and believe that the “collective wisdom” of the crowd is able to spot any scams before your money is lost. However, it rarely is that simple. The popular success story of the crowd spotting fraud, the Kobe Red scam, was actually led by a documentary team who played a major role in stopping the fraud before any money changed hands. In addition, “fraud” in the context of securities offerings means something much broader than a Dr. Evil plotting to run away with your money. It also includes liability for misleading statements...
October 09, 2013 by Andrew Stephenson
Caveat emptor is Latin for "let the buyer beware." The principle is most often applied in the sale of property — the buyer has sufficient amount of time to discover any defects and must live with those defects after the sale closes. There is no remedy available for a buyer that merely phones in the research and buys something unfit for use. The only exception to the principle is if the seller actively conceals defects or makes misrepresentations about the property. That is fraud. While securities fraud is gussied up in statutes and rules — Securities Act Section 11, Securities Act Section 12(a)(2), Securities Act Section 17(a), Exchange Act Section 9,...