Crowdcheck Blog

Lawyers and finance peeps who practiced around the turn of the millennium will recall many of the issues that were raised by the misbehavior of investment banks’ research departments. I-bank analysts would take company executives golfing and, somewhere round the fourth hole, would ask “So, Executive, how is the distribution channel for the next quarter looking? If I said four thousand units a month, would I be off-base?” If the executive gave any answer other than “No comment and is that your ball in the sand?” then the company could be held to have “entangled” itself in the research report that resulted, and be responsible for any misleading statements in it.[…

This isn’t specifically commentary on crowdfunding, but some thoughts on some of the issues that the broader economy is facing. I was pleased to see this article in the NYT highlighting the challenges parents are facing. Parents and people who work with parents (and that’s pretty much everyone in the working world) do not care so much about whether the bars are open, or whether they can get their nails done as what to do with the %&**&!! kids. In general, the move to online working from home has been comparatively easy on CrowdCheck. We have always been a distributed workforce (I have employees I’ve never actually met in person) and we’ve been able to…

While Regulation A and Regulation CF have been effective tools for early stage companies to raise funds from investors across the country, secondary trading in those securities can often be a challenge, in part due to state-by-state securities regulations – often referred to as “Blue Sky” laws – that restrict which stocks brokers can discuss with their retail clients. This applies even to securities traded on new “alternative trading systems” or ATSs. To help companies meet these Blue Sky requirements and reach a potentially larger group of investors, CrowdCheck has launched TradeCheck, which includes a partnership with the Mergent Manual to allow private…

This is the third in a series of blog posts on the topic of the SEC’s proposed changes to the exempt offering matrix. Below are earlier posts: SEC exempt offerings: process SEC exempt offerings proposal: no relief from offering circular delivery requirements Well, CrowdCheck finally got our comment letter on the proposals filed. It took the SEC a while to post it; was it the Monty Python reference or the “Mean Girls” quote that threw them off, I wonder? There are a lot of things to like in the proposals and some things that we found problematic or too complicated. If our comment letter is too long (it’s only 31 pages), here are the highlights: While our…

This is the second in a series of blog posts on the topic of the SEC’s proposed changes to the exempt offering matrix. Below is a link to the first post: SEC exempt offerings: process Oh, SEC, how you tease. Back in June 2019, the Concept Release on exempt offerings discussed the Regulation A offering circular (OC) delivery requirements that we flagged as problematic some time ago. (The rules require that, after qualification, written offers -- this includes radio and TV -- must be “accompanied or preceded by” the OC. This is not something you can do on TV or radio, or, for that matter, in tombstone ads in the WSJ.) The discussion in the text of the Concept…

On March 26, 2020, the SEC adopted temporary amendments to the rules governing the filing of periodic and current reports under Regulation A (Rule 257) and Regulation Crowdfunding (Rule 202) to provide relief to issuers that are challenged in meeting their obligations to file those reports on a timely basis because of the outbreak of coronavirus disease 2019 (COVID-19).  If an issuer is not able to meet a filing deadline that falls during the period from and including March 26, 2020 to May 31, 2020 (the “Relief Period”), the issuer will have 45 days from the date that the report was due to file the report, subject to certain conditions (the "Extension Period…

This will be the first in a series of blog posts on the topic of the SEC’s proposed changes to the exempt offering matrix. This first one is (mostly) about process. The SEC has proposed changes to its rules for exempt offerings. The rules would change aspects of Regulations A, CF and D and the way they all work together. We’ll be getting into the details over the course of the next few weeks, but we wanted to mention a few things before diving in. First, these are PROPOSED rules. They are not going into effect for a while (see timing below). They might never go into effect. They might just sit on a shelf gathering dust. They might get changed and reproposed.…

One aspect of Regulation A that does not seem to be getting the attention it should is the fact that it facilitates investment into things other than the future performance of early-stage companies. Real estate is an obvious alternative to early-stage equity. Even where the real estate project has not been built out yet, real estate investments (which may be REITs or other real estate funds) promise investments that have an earlier time horizon, in some cases more liquidity and in many cases generate cashflow in real time. There have been scored of successful real estate offerings under Regulation A.  A completely different category of offerings that is taking…

After undertaking an offering under Regulation Crowdfunding or Tier 2 of Regulation A, issuers are required to file ongoing reports with the SEC. Regulation Crowdfunding requires an annual report, while Tier 2 of Regulation A requires an annual report and semi-annual report. Regulation Crowdfunding also requires companies to make the annual report available on its own website. The annual report for Regulation Crowdfunding requires financial statements prepared in accordance with GAAP and certified by management. For Tier 2 of Regulation A, the annual report requires audited financial statements, and the semi-annual report requires management certified financial…

I love it when SEC Commissioners quote (arguably even cite in support) the Boss. This is Hester Peirce, aka CryptoMom, proposing a safe harbor for crypto entrepreneurs who are developing tokens on networks yet to be built. She summarizes the problem thus: Many crypto entrepreneurs are seeking to build decentralized networks in which a token serves as a means of exchange on, or provides access to a function of the network.  In the course of building out the network, they need to get the tokens into the hands of other people.  But these efforts can be stymied by concerns that such efforts may fall within the ambit of federal securities laws.  The fear of running…