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CrowdCheck Blog

Insights and information for online capital formation

 
November 16, 2016 by Andrew Stephenson
Funding portals are governed by unique communication rules under Regulation CF and FINRA’s Funding Portal Rules. These rules derive from the restrictions on funding portals regarding soliciting investors and providing investment advice. Additional information can be found in the memo here. 
This entry is filed under Crowdfunding, FINRA, SEC, Section 4(a)(6), Securities Law, Blog
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November 09, 2016 by Andrew Stephenson
Just as with issuer compliance, investment platform compliance with Regulation CF has been all over the map since Regulation CF went into effect in May. Under Rules 300 to 305 of Regulation CF, all intermediaries in Regulation CF offerings have specific requirements that they must meet. For instance, they must register with the SEC and FINRA, take measures to reduce the risk of fraud in transactions, provide educational materials to investors, and comply with process requirements for each offering. It is in the processes for each offering, Rule 303, that we see the most variation in compliance. In particular, under Rule 303, all platforms are required to make...
This entry is filed under Crowdfunding, Disclosure, FINRA, SEC, Blog
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October 06, 2016 by Andrew Hanks
CrowdCheck CEO Sara Hanks was quoted in The Hill's covereage of the recent SEC Advisory Committee on Small and Emerging Companies meeting. Sara Hanks is the Co-Chair of ACSEC. http://bit.ly/2dV8c4V
This entry is filed under Crowdfunding, In The News, SEC, Blog
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September 28, 2016 by Andrew Stephenson
On September 16, 2016, the SEC filed its first suspension of the Regulation A exemption against an issuer for failure to file its required annual statement. A suspension of the Regulation A exemption is a Bad Act, disqualifying the company from raising capital under Regulation A, Regulation CF, and Rule 506 of Regulation D. The order notes that under Rule 257 of Regulation A, issuers whose offering statements have been qualified under Tier 2 must file annual reports on Form 1-K for the fiscal year in which the offering statement became qualified and for any fiscal year thereafter. This requirement continues until the issuer meets the requirements to no longer...
This entry is filed under Bad Actor, Disclosure, Regulation A, SEC, Securities Law, Blog
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September 22, 2016 by Andrew Stephenson
While never intended to be the type of discussion that accompanies the management’s discussion and analysis of a registered securities offering, the SEC expects issuers making offerings under Regulation CF to discuss all the material information regarding their current liquidity and capital resources. Under Rule 201(s), this discussion must cover each period for which the issuer has provided financial statements as well as identification of any material changes that have occurred after the end of the periods covered by the financial statements. In practice, the discussion would include items like cash on hand, burn rate, and availability of other sources of...
This entry is filed under Crowdfunding, Disclosure, SEC, Section 4(a)(6), Blog
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September 18, 2016 by Sara Hanks
  We live in a world without borders. Securities laws, however, have clearly-defined jurisdictional limits, many of them inconsistent across countries. We live in a world where information wants to be free. Securities laws, however, have very clear ideas about how where information is allowed to go and who is responsible for it. This is all becoming evident in the area of securities crowdfunding. I’ve come across a couple of issues recently which underline the need for a clear, comprehensible, cross-jurisdictional agreement as to whose laws will apply to what transactions and when people should be allowed to invest in an offering being made in another country....
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September 12, 2016 by Andrew Stephenson
The financial statements and corresponding discussion of financial condition of an issuer undertaking a securities offering under Regulation CF is arguably the most important set of information for an investor to make an informed investment decision. While the story of the company is critical for gaining investor interest, it is the financials that help an investor understand the potential for financial return. The financial statements and discussion are required disclosures under Rule 201 of Regulation CF. However, according to CrowdCheck’s research, approximately 35% of Regulation CF issuers are conducting, or have conducted, offerings with non-compliant...
This entry is filed under Crowdfunding, Disclosure, SEC, Securities Law, Blog
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September 06, 2016 by Andrew Stephenson
The overlooked Reg A requirement that could land you in hot water https://dealflow.com/seriesd/overlooked-reg-requirement-land-hot-water/
This entry is filed under Bad Actor, Regulation A, Securities Law, Blog
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September 01, 2016 by Andrew Stephenson
Over the next few weeks, CrowdCheck will be posting a series of blog posts regarding issuer compliance with the disclosure requirements of Regulation CF. We believe this series will be important for prospective issuers and platforms, and ultimately investors. Of the ninety-six Form C filings as of September 1, 2016, very few have actually met the disclosure requirements under Rule 201 of Regulation CF. This is important for a variety of reasons. First, issuers operating under the belief that they qualify for Regulation CF may actually be in violation of Section 5 of the Securities Act. To qualify for Regulation CF, the issuer must provide all of the information...
This entry is filed under Bad Actor, Crowdfunding, Disclosure, Section 4(a)(6), Blog
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August 15, 2016 by Andrew Stephenson
A few weeks ago, the State of Ohio was thrust into notoriety in the crowdfunding community because the state issued notices to Reg CF issuers organized in the state that they would be required to pay a notice filing fee for their offerings. In response to those notices, CrowdCheck sent a letter to the Ohio Division of Securities (the “Division”) requesting clarification of the filing rules and fees, as well as asking the Division to ease the process for Reg CF issuers. The Division has replied to that letter and provided guidance for Ohio based issuers offering securities under Reg CF. The full letter is available here. First, the Division makes clear that...
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