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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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August 08, 2016 by Diana Leung
*Our summer intern, Diana Leung, who will be heading to Georgetown University in the fall, weighs in on disclosure compliance.   The brilliant start-up companies that define crowdfunding are transforming the meaning of the American Dream. Citizens not only have an equal opportunity to achieve prosperity through the traditional conduits of society but can now do so through their own original thoughts and ideas. Entrepreneurial success is no longer limited by the confines of well-established industries nor to the incredibly wealthy – from biodegradable toothbrushes to microwavable notebooks, crowdfunding is bringing creativity to fruition. But, crowdfunding still...
This entry is filed under Crowdfunding, Disclosure, Due Diligence, Securities Law, Blog
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July 26, 2016 by Andrew Hanks
Read CrowdCheck General Counsel Huiwen Leo's article featured on Locavesting! http://www.locavesting.com/featured/for-investors-the-key-to-crowdfunding-success-is-due-diligence/
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July 20, 2016 by Andrew Stephenson
Many small companies considering undertaking an offering under Tier 2 of Regulation A may find it advantageous to conduct their offering without the use of a registered broker-dealer. Perhaps they have a core base of supporters that would be interested in investing, or they have the ability to undertake their own online, and offline, marketing campaign to get investor interest. However, one potential pitfall of this strategy is that a handful of states require the company to register with the state as an issuer-dealer — essentially the company itself must be registered like a broker-dealer in the state.  CrowdCheck has put together a helpful summary of the...
This entry is filed under Bad Actor, Regulation A, Securities Law, Blog
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June 08, 2016 by Andrew Stephenson
After extensive time spent reviewing the communication rules under Regulation CF and their interplay with other securities laws, as well as consulting with the SEC, CrowdCheck has released its comprehensive memo on communications and publicity by issuers prior to and during a Regulation CF offering.  The communication rules for Regulation CF differ substantially from corresponding communication rules for offerings under Regulation A and Rule 506(c) of Regulation D, and from IPOs. We hope this memo will bring some clarity to the communications rules for platforms and issuers.
This entry is filed under Crowdfunding, SEC, Section 4(a)(6), Securities Law, Blog
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