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Section 4(a)(6)

Delivering All Things Crowdfunding and Online Investing

 
February 13, 2017 by Andrew Stephenson
So far, Regulation Crowdfunding appears to be doing what it was always intended to do. Small businesses are able to raise funds to begin or expand their business operations. Some companies could be categorized as innovative growth companies, others more main street. In any case, a common theme is that issuers are in need of cash and see crowdfunding as a method that provides additional benefits over traditional loans or angel investment – if those options were even available to the issuer to begin with. As offerings under Regulation Crowdfunding can take a few months, often with substantial upfront costs, many issuers find themselves in the position of needing...
This entry is filed under Crowdfunding, SEC, Section 4(a)(6), Securities Law, Blog
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December 19, 2016 by Sara Hanks
If you raise capital online, you're probably a New Economy, Internet 4.0 type of company, right? Leverage the cloud, move fast, break rules (not securities rules), create synergies, it's all about the hustle. Right? Maybe. Some of you new era companies should be huddling in your hoodies for shame, 'cos some of you have distinctly old school bylaws when it somes to stock certificates. Yes, stock certificates. Those bits of paper with incomprehensible things written on them that say who owns shares in your company. Some of you still have bylaws that say that paper stock certificates MUST be issued. And you are engaging great new transfer agents who do everything...
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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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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 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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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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May 19, 2016 by Andrew Stephenson
Being in the crowdfunding space, my Twitter feed regularly fills up with “how-to” information on promoting crowdfunding campaigns, and who to hire for their experience running social media campaigns. While these outfits may know what they are doing when it comes to donation/rewards crowdfunding, much of what they offer is not compliant with Regulation CF. Social media campaigns and promoting the offering are very important for a successful raise under Regulation CF, but there are strict rules about what can be said and issuers need to be careful to not turn their entire website into an offer of securities. The underlying rationale for the advertising rules...
This entry is filed under Crowdfunding, Regulation A, SEC, Section 4(a)(6), Blog
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May 09, 2016 by Sara Hanks
With one week to go we are hearing that a number of companies are realizing their financial statements are not going to be reviewed in time by their accountants. But they really want to launch on May 16! So they are planning to file on Form C for amounts less than $100,000 and "certifying" the financials, with a view to filing an amendment later. Think about this carefully before you do it. The financial statements (for any level of raise) are required to be prepared in accordance with Generally Accepted Accounting Principles (GAAP), reflecting all the requirements of GAAP with respect to revenue recognition, capitalization or expensing, and all that other...
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