Crowdcheck Blog

Hey, remember when Oprah gave away all those cars and all the lucky recipients got a car with accompanying tax bill? We could have something like that in crowdfunding too. For companies seeking crowdfunding, it's natural that they will seek to market their offering to the people who love their product or service. And a company's crowd is going to be super-happy not just to get the shares, but also more of the company's product or service. A company producing zombie movies can give away tickets to the next premiere. A candy company can give away calorific goodies. And that's great, but in this regulated world we have to consider the tax and accounting…

Oh, companies seeking crowdfunding under Regulation CF, it's going to be so tempting to do this. There'll be a time when you have all the information required by Rule 201 loaded on SuperPortal's site. All except the financial statements, which the accountant has not finished reviewing. She says her review isn't going to result in any material changes. And it's May 16, and you really want to be the first to go live on SuperPortal. What if you filed the Form C without the accountant's review? No-one would notice (the SEC doesn't officially review Form C filings), would they? And you could update the financials when you got them finished. Don't do that. For a…

One seemingly critical difference between conducting a Regulation A offering under Tier 1 or Tier 2 at the federal level is the requirement to provide audited financial statements. The SEC does not require audited financial statements for Tier 1 offering, whereas audited financial statements are required for Tier 2. However, this difference is merely a red herring. Nearly every Tier 1 offering will require audited financial statements, because it is likely that at least one state in which the issuer intends to offer its securities requires audited financial statements. In our review of the statutory and administrative rulings of state securities regulators, 27…

View our comment letter: https://www.sec.gov/comments/s7-22-15/s72215-9.pdf View the proposals: http://www.sec.gov/rules/proposed/2015/33-9973.pdf  

Regulation A is a public offering of securities. Even though it is not a full blown IPO, it still takes a substantial amount of time to prepare and to have a successful offering. At CrowdCheck, we have been approached by a handful of companies that are excited about Regulation A and want to start selling to investors in a month. That’s great we say. We then ask, have you engaged an accountant? No. Do you know what you want to offer investors? No. Have you converted from an LLC to a C Corporation? No. You get the idea. A typical timeline for a Regulation A offering requires about two months of lead time. During that time, your accountants and lawyers can work…

Written by CrowdCheck CEO Sara Hanks and published in Bloomberg BNA Securities Regulation & Law Report. http://bit.ly/1TAjN3d

OK, that has GOT to be the most boring title for one of the most exciting developments in the securities markets, right? I've mentioned before that the SEC is taking a "free market disclosure" approach to Regulation A. In contrast to what happens in the context of an IPO, where you can only make very limited communications outside the prospectus, in Regulation A you can make "testing the waters" communications up to the time the SEC qualifies your offering. Additionally, you can market to prospective investors after qualification, and we are seeing a lot of this type of activity right now. As we know, "securities are sold and not bought" and traditionally the "…

CrowdCheck has put together its definitive summary of Regulation Crowdfunding as adopted by the SEC. The memo can be found here, http://bit.ly/1XE8c44

Here's hoping that everyone in the crowdfunding community is planning to respond to the SEC's proposals on Rule 147 and 504. Even if they think the SEC got it right. And that they will comment on all aspects of the proposals, even the bits that the SEC got right. Here's why. Let's say the SEC proposes a rule that says companies must disclose whether pets are permitted at the company's offices. Let's imagine nearly everyone thinks "Well, that's reasonable. I want to know how pup-friendly a company is." They don't comment because they assume the SEC will adopt the rules as proposed. But in the proposing release the SEC has asked whether this disclosure is…

Actually, the SEC has no views specifically on singing kittens that I know of (although I am aware of at least one SEC staffer smuggling a cat into the building). The issue arises, though, in the context of "notices" of offerings under the new crowdfunding rules. As you probably know, the provisions of the JOBS Act limit the extent to which a company issuing securities can advertise the terms of the offering anywhere other than on the website of the broker-dealer or funding portal hosting the offering. The SEC's rules clarify what is permitted in these notices. The issuer can post a brief notice including information about the company and what it does and…