Delivering All Things Crowdfunding and Online Investing
December 15, 2014 by Andrew Stephenson
Rethinking Section 3(a)(11) for State Crowdfudning http://joewallin.com/2014/12/12/rethinking-section-3a11-state-crowdfunding/
Securities crowdfunding: A quick guide on performing platform due diligence - Orlando Business Journal
December 12, 2014 by Andrew Hanks
December 12, 2014 by Andrew Hanks
CrowCheck CEO Sara Hanks looks into the timing of the JOBS Act crowdfunding regulations. Guest post on the Seedinvest Blog. http://www.seedinvest.com/blog/sec-crowdfunding-schedule-october-2015/ This is the time of year when tiny tots, with their eyes all aglow, ask their mothers, “When will Chair White release the rules, Mommy?” Sorry, I got caught up in this week’s Santa-is-coming-with-crowdfunding-rules/Santa-is-not-bringing-anything-but-coal meme. There have been several articles published in the last few days speculating that the SEC’s rules for either Section 4(a)(6) (crowdfunding under Title III of the JOBS Act) or expanded Regulation A (Title IV under...
November 23, 2014 by Sara Hanks
Sounds so disreputable, doesn’t it? But some of the SEC rules that apply to stock touts apply to several types of activity in the new online markets. Back in Ye Olden Tymes (the tech bubble days of the late 1990s) the SEC’s newly formed internet task force brought 23 enforcement actions against 44 companies and individuals in one epic event. All 23 cases involved allegations of illegal touting of securities under Section 17(b) of the Securities Act. This is what Section 17(b) says: It shall be unlawful for any person, by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, to publish, give...
October 31, 2014 by Andrew Stephenson
Securities laws in the United States are based around the idea of disclosure and protection of the naïve investor from unscrupulous practices by issuers of securities — the sophisticated guys duping the little guy. However, for many early-stage companies, the sophisticated guys at the table are the investors. Not only do they hold all the cards on the terms of the deal, they know exactly what type of recourse they have if things do not work out the way they would like. Take the rules surrounding securities fraud. To succeed in a securities fraud claim the investor must show that the issuer made a misstatement of a material fact, or omitted information...
This entry is filed under Disclosure, Due Diligence, Fraud, Rule 506(b), Rule 506(c), Securities Law, Blog
October 17, 2014 by Sara Hanks
I first started going on about Regulation S and online offerings back in 2012, when I noticed that US companies were doing offerings theoretically "outside" the United States without paying any attention to the requirements of US securities law. Then CrowdCheck started working on EB-5 offerings, and we were absolutely appalled at the ignorance of securities law in general and the extraterritorial application of securities law in particular. And it's still going on. We've seen a couple of deals recently where securities are being offered simultaneously on US and non-US online platforms and seen some "issues" there. So we are working on a series of memos and...
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...
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...
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...
This entry is filed under Blog
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