Halloween blog special: Sometimes it’s the investors who are scary…
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 […]
Nobody is too big for Bad Actor Rule compliance
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 […]
Updated Summaries of Intrastate Crowdfunding Exemptions
Since March, when CrowdCheck first put together a summary of intrastate crowdfunding exemptions, there has been a significant amount of activity by various states to ease the regulatory process for companies to offer securities through the use of the intrastate exemption to SEC registration. The following two charts were produced as a collaboration by CrowdCheck, Anthony […]
Intrastate crowdfunding: Nice, but not a game changer
In recent months, a lot of excitement has built up surrounding the enactment and use of intrastate crowdfunding exemptions as an alternative to waiting for the SEC to finalize Regulation Crowdfunding at the federal level. Presently, at least thirteen states have introduced or enacted some form of exemption from state regulation for intrastate crowdfunding offerings. These exemptions […]
First crowdfunding fraud enforcement action by State Attorney General
As many in the crowdfunding space are now well aware, the Washington State Attorney General has brought a case against the sponsors of the Asylum Playing Card Kickstarter campaign. The lawsuit alleges the campaign made misrepresentations to project backers that constitute “unfair or deceptive acts in trade or commerce“. The basic facts alleged by the state are […]
Still do it right the first time: Delaware’s new mulligan for botched issuances of securities
An essential part of the due diligence on an offering of securities through Section 4(a)(6) crowdfunding or Rule 506(c) is ensuring that any previous issuances of securities (such as offerings to friends and family) are not defective. For instance, if the securities were not authorized by the company’s certificate of incorporation, or properly approved by […]
The curious case of crowdfunding rewards as dividends
The buyout of Oculus VR has renewed interest in the possibilities of securities crowdfunding. The tricky part of recreating the crowdfunding success of Oculus VR is to generate the same excitement as a rewards campaign within the bounds of a serious securities offering. In our previous post, CrowdCheck noted some of the issues that can arise when undertaking a […]
What if Oculus offered securities as well as rewards?
The Facebook acquisition of Oculus VR has brought a lot of attention to crowdfunding campaigns by early stage companies. Some of that attention has not been positive; even resulting in death threats to the Oculus VR founders and their families. Much of the more constructive criticism is based around the question of whether the 9,522 Kickstarter backers, who contributed $2,437,429 to […]
Oculus: Crowdfunding scam or crowdfunding success?
I don’t understand the reaction to Facebook buying Oculus by opinion writers. Much of it seems to misrepresent either what was expected to happen or the cause of what happened. For example, Joel Johnson, an early backer of Oculus on Kickstarter and writer for ValleyWag is disappointed his contribution enabled Oculus to obtain venture funding, leading ultimately to […]
CrowdCheck’s summary of intrastate crowdfunding offering exemptions
With the amount of attention that intrastate crowdfunding has been getting lately, we thought it would be important to highlight the key requirements, limitations, and conditions of those various state statutes and rules. You can find our summary chart here.