Top Menu

CrowdCheck Blog

Delivering All Things Crowdfunding and Online Investing

September 24, 2015 by Andrew Hanks
Thomson Reuter's Practical Law interviews CrowdCheck CEO Sara Hanks  on trends in equity crowdfunding and key issues for companies considering a crowdfunding offering.   Expert Q&A on Equity Crowdfunding
submit to reddit
September 18, 2015 by Andrew Stephenson
Here at CrowdCheck, we have been worried about how state regulators would respond to the SEC's new testing the waters rules for Tier 2 Offerings under Regulation A.  As we previously addressed on this blog, the new rules exempted testing the waters communications from federal securities registration requirements, but left some ambiguity with respect to the application of "state notice" filings (which are permitted even in Tier 2 offerings).  After all, testing the waters communications are offers of securities.  And when those communications are made through open, online forums —such as through an investment platform or social media — those are offers of...
This entry is filed under Regulation A, Securities Law, Blog
submit to reddit
September 07, 2015 by Sara Hanks
I had a great conversation with a member of the SEC Staff the other day in which he referred to the type of disclosure to be made under Regulation A as “free market disclosure.” I think that’s a great term and much better than the way I was thinking of disclosure under Regulation A, which was in terms of “non-application of the principle of ‘monopoly of the prospectus’.” Oops, I see I almost lost you there. I was talking securities law geek language again. The “monopoly of the prospectus” refers to the fact that, if you were doing a regular IPO, instead of a Reg A offering, you would not be able to make any statements about the offering outside the official...
This entry is filed under Crowdfunding, Disclosure, Regulation A, SEC, Blog
submit to reddit
August 18, 2015 by Andrew Hanks
Crowdcheck submitted a comment letter today to Washington State's DFI with respect to its proposed notice filing requirements for Tier 2 of Regulation A.
This entry is filed under Regulation A, Blog
submit to reddit
August 14, 2015 by Andrew Stephenson
Short answer, no. Long answer, maybe, but only after you wait for an extended period of time to ensure that no state would consider your testing the waters campaign to be integrated with your current offering.  Why is this important? At CrowdCheck, we have heard advice making the rounds that seems to forget that the states have retained their ability to regulate the registration of securities under Tier 1 offerings.  And states do take their registration requirements seriously. This post includes a survey of the filing requirements to communicate in a Tier 1 offering for all 50 states plus the District of Columbia and Puerto Rico. This post will not discuss the...
This entry is filed under Regulation A, SEC, Securities Law, Blog
submit to reddit
July 29, 2015 by Andrew Stephenson
Don't fool yourself.  While an offering under Regulation A+ is not an IPO on a stock exchange or full registration under the Securities Act, it is a big deal.  Your company is preparing for a public offering of securities and will be taking on investors with whom you do not have any previous relationship.  Those investors may have different ideas about the future of your company than you do and may demonstrate those ideas in the form of a lawsuit.  That said, if Regulation A+ is still right for your company, you can help to protect, or maybe mitigate or reduce that risk. The place to start is insurance.  There are a variety of insurance products out there to...
This entry is filed under Disclosure, Due Diligence, Regulation A, Blog
submit to reddit
July 14, 2015 by Sara Hanks
There’s an increasing amount of publicity out there from companies that are “testing the water” (TTW) before deciding to make a Regulation A offering. At CrowdCheck, we love the idea of TTW. It’s an efficient way of making sure that it’s going to be worth a company’s time to hire lawyers and accountants and go through the SEC review process. But there are important basic SEC rules that haven’t changed at all, and you need to bear them in mind. First, know that anything that “conditions the market” or promotes interest in a capital-raise, is an “offer” of securities. That can include posting a TTW campaign on an online investment platform, an appearance on...
This entry is filed under Crowdfunding, Disclosure, Regulation A, SEC, Securities Law, Blog
submit to reddit
July 08, 2015 by Andrew Stephenson
Online investment platforms and the EB-5 Visa investment community have been abuzz lately following the June 23 announcement by the SEC that is has issued a final order against Ireeco, LLC and Ireeco Limited for acting as unregistered brokers in violation of Section 15(b) of the Securities Exchange Act.  The practices by Ireeco, LLC included the establishment of an online portal that assisted foreign investors with selecting EB-5 Regional Centers and investment projects that suited the investor's interests.  Ireeco was then paid a fixed amount of the administrative fee typically charged to EB-5 investors by the Regional Center when the investor made his or her...
This entry is filed under Bad Actor, Failure, Fraud, Offerings: EB5, SEC, Securities Law, Blog
submit to reddit
July 06, 2015 by Andrew Stephenson
A common theme that CrowdCheck is hearing from potential issuers looking into using Regulation A+ is that they are not certain they want to take on the obligations of the ongoing reporting for an indeterminate length of time.  While understandable, the worries about the ongoing reporting requirements do not appear to fully take into account the options that companies have under Tier 2 of Regulation A.  Further, when compared to the potential cost of conducting a Tier 1 offering, the ongoing reporting does not look so bad. The SEC gives companies with ongoing reporting obligations under Tier 2 the ability to terminate those reporting obligations.  Under Rule 257...
This entry is filed under Disclosure, Regulation A, SEC, Securities Law, Blog
submit to reddit
July 01, 2015 by Sara Hanks
Pretty much everyone knows by now that audited financial statements are required for offerings under Tier 2 of Regulation A. While the SEC doesn’t require audited financials (or any kind of review by outside accountants) for Tier 1, some states do require audited financials in Tier 1 offerings. But do you know what the audit letter is supposed to look like? That is important. Without getting too much into the weeds, the SEC requires that audit reports meet the requirements of Regulation S-X. And that means those audit reports must be “clean.” There can’t be any reservations or qualifications or limitations on scope on the audit. Here’s an example of the...
This entry is filed under Crowdfunding, Regulation A, SEC, Blog
submit to reddit