Insights and information for online capital formation
What are we gonna do to screen for you… Sorry, as a child of the 80s I couldn’t resist, but my bad version of the classic “Cops” theme does reflect a serious question: how are issuers and intermediaries going to comply with the new “Bad Actor” disqualification provisions of Rule 506, Regulation A, and Regulation Crowdfunding offerings? The short answer is to use CrowdCheck’s BadActor Report℠. Why CrowdCheck is the answer will require some explanation. The first obvious question is, what are those disqualification provisions? Well, the full text of the rule is here, and a condensed analysis is here (page 7), but the really condensed analysis is this: companies…
This entry is filed under Bad Actor, Fraud, Rule 506(b), Rule 506(c), SEC, Section 4(a)(6), Securities Law, Blog
As an entrepreneur you are probably concerned about saving money. Every dollar saved extends your runway just a little bit longer, lets you fight another day, and lessens the need for outside funding. Fortunately, in many ways things are better than ever before for small businesses — computing power is cheap, off-the-shelf or web-enabled software provides functionality at a fraction of the cost of older solutions, and viral marketing provides the chance for a very high return on very limited investment. Even the legal services market is being disrupted with new legal and quasi-legal (in the sense it isn’t required that someone be a lawyer to perform these…
This entry is filed under Crowdfunding, Disclosure, Due Diligence, Offering materials, Rule 506(b), Rule 506(c), Securities Law, Blog
We often talk about how due diligence can help protect investors from fraudulent investments, but it is important to mention that properly done due diligence can also protect every other party to a sale of securities. An example of this is going on now in Canada. As reported by JD Alois in this excellent article on Crowdfund Insider, a Canadian company, GXP Technologies, finds itself accused of fraud in its effort to “kickstart” the LUCI lucid dream inducer. The company for its part denies the allegations and claims that the crowd has been stirred into a frenzy by a rival. It also has canceled its very successful campaign (about $400,000 raised on a goal of…
This entry is filed under Crowdfunding, Due Diligence, Fraud, Blog
So did you watch the live feed of the SEC meeting discussing the proposed crowdfunding rules? We did. Fascinating stuff. Of course this is just the start; now we wait for the proposals and will analyze them here. In the mean time remember: you can't seek investment via crowdfunding yet, the rules aren't final, if you try you will get in trouble. What you can do is read the proposals and submit comments to the SEC on the proposals, which is something all of the commissioners heartily welcomed.
This entry is filed under Crowdfunding, SEC, Section 4(a)(6), Blog
So, did you wake up this morning to find a pile of investment money, or some new shares in a great company, or a bunch of new job offers falling from the sky? Me neither; bummer eh? In fact, unless you were looking really closely you might not have realized that anything had changed at all. Yes, there are some new companies generally soliciting investment from accredited investors, but it isn’t a deluge, and the GDP hasn’t spiked 5% overnight. So does this mean that general solicitation a bust? Has the JOBS act failed? Is securities-based crowdfunding also doomed? No, not at all, but it does mean that we need to have realistic expectations. Working in…
This entry is filed under Rule 506(c), SEC, Securities Law, Blog
This article continues the series about what you need to do to get ready to seek investment online. This is not legal advice; please speak with your attorney about your unique situation. So after you have chosen what type of corporation you want to be, careful to balance your day-to-day operations with the requirements of the investment you want, you are done, right? Wrong. There are still quite a few things you need to do to be ready to seek investment. One of the first ones is actually getting incorporated and then staying in good standing. As I mentioned last time, corporations are creatures of state law, so to incorporate you will need to comply…
This entry is filed under Rule 506(c), Securities Law, Blog
So, you are an entrepreneur considering seeking investment via new Rule 506(c), very exciting! I’m sure you have all types of things running through your mind: pitch decks, projections, and where you will spend that sweet, sweet investment cash (equipment, labor, and marketing I’m sure). However, there are some other, more mundane things you should really think about before you dip your toe in those waters, because when a company seeks investment a lot of the little things that might never come up otherwise become critically important. This article is the first in a series about what you need to do to get ready to seek investment online, and like all the…
This entry is filed under Rule 506(c), Securities Law, Blog
Brian Knight's oped in Crowdfund Insider on how small businesses need a place at the SEC's table.
This entry is filed under In The News, Blog
We now have final General Solicitation (pdf) and Bad Actor (pdf) rules in the Federal Registry. We also have an effective date for the rules, September 23rd. This means that on the 23rd you can start soliciting (consistent with all the applicable rules and regulations). What to do before then? Prepare, decide which B/D, if any, you want to use, make certain all of your materials are correct and accurate (we can help with that), and get excited, because the flag on general solicitation in Regulation D raises is about to drop!
This entry is filed under Due Diligence, Rule 506(c), SEC, Securities Law, Blog
Well, sort of there, we watched the meeting on the internet, poured over the text of the rules, wrote up a little memo, and dusted off the podcasting equipment to talk about what the SEC did and what it might mean for you and for crowdfunding.
This entry is filed under Educational, SEC, Podcast