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Bad Actor

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September 28, 2016 by Andrew Stephenson
On September 16, 2016, the SEC filed its first suspension of the Regulation A exemption against an issuer for failure to file its required annual statement. A suspension of the Regulation A exemption is a Bad Act, disqualifying the company from raising capital under Regulation A, Regulation CF, and Rule 506 of Regulation D. The order notes that under Rule 257 of Regulation A, issuers whose offering statements have been qualified under Tier 2 must file annual reports on Form 1-K for the fiscal year in which the offering statement became qualified and for any fiscal year thereafter. This requirement continues until the issuer meets the requirements to no longer...
This entry is filed under Bad Actor, Disclosure, Regulation A, SEC, Securities Law, Blog
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September 06, 2016 by Andrew Stephenson
The overlooked Reg A requirement that could land you in hot water https://dealflow.com/seriesd/overlooked-reg-requirement-land-hot-water/
This entry is filed under Bad Actor, Regulation A, Securities Law, Blog
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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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July 20, 2016 by Andrew Stephenson
Many small companies considering undertaking an offering under Tier 2 of Regulation A may find it advantageous to conduct their offering without the use of a registered broker-dealer. Perhaps they have a core base of supporters that would be interested in investing, or they have the ability to undertake their own online, and offline, marketing campaign to get investor interest. However, one potential pitfall of this strategy is that a handful of states require the company to register with the state as an issuer-dealer — essentially the company itself must be registered like a broker-dealer in the state.  CrowdCheck has put together a helpful summary of the...
This entry is filed under Bad Actor, Regulation A, Securities Law, Blog
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April 07, 2016 by Jamie Ostrow
Sure, there has been a lot of talk of Regulation A. Under Tier 2 of Regulation A, you can raise up to $50 million from the crowd – everyday folks (under Regulation A, investors do not need to be accredited investors).  As a company you might be thinking, great, sign me up and how quickly can I get started?  While Regulation A is the right fit for some companies, it is not the right fit for all companies.  Below, we go through some threshold questions about eligibility to see if Regulation A is available to you. 1. Is your company organized in and with its principal place of business in the United States or Canada?  (If yes, skip to question 2) Regulation A is...
This entry is filed under Bad Actor, Disclosure, Regulation A, Securities Law, Blog
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July 08, 2015 by Andrew Stephenson
Online investment platforms and the EB-5 Visa investment community have been abuzz lately following the June 23 announcement by the SEC that is has issued a final order against Ireeco, LLC and Ireeco Limited for acting as unregistered brokers in violation of Section 15(b) of the Securities Exchange Act.  The practices by Ireeco, LLC included the establishment of an online portal that assisted foreign investors with selecting EB-5 Regional Centers and investment projects that suited the investor's interests.  Ireeco was then paid a fixed amount of the administrative fee typically charged to EB-5 investors by the Regional Center when the investor made his or her...
This entry is filed under Bad Actor, Failure, Fraud, Offerings: EB5, SEC, Securities Law, Blog
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February 12, 2015 by Andrew Stephenson
A recent Washington Post article by Steven Overly asked "Why has hardly anyone applied for equity crowdfunding in D.C.?"  This is an important question.  The DC Department of Insurance, Securities and Banking can be applauded for its efforts to promote the new rules.  Representatives of the Department have spoken about the new exception at a number of events and forums, including at the D.C Bar Association, at which CrowdCheck also presented. The article in the Washington Post cites four reasons to explain the lack of uptake: the availability of non-investment crowdfunding through sites like Kickstarter and Indiegogo; general lack of knowledge about the...
This entry is filed under Bad Actor, Crowdfunding, SEC, Securities Law, Blog
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September 02, 2014 by Andrew Stephenson
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 instead of a small violation, the SEC has issued an enforcement order against a financial behemoth, who now is subject to the Bad Actor rule prohibitions on participation in offerings utilizing Rule 506 of Regulation D? Such is the situation that Citigroup now faces.   As a result of the delayed entering into an...
This entry is filed under Bad Actor, Rule 506(b), Rule 506(c), SEC, Securities Law, Blog
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June 11, 2014 by Andrew Stephenson
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 allow companies to sell securities in offerings exempt from SEC registration through making notice filings with their respective state securities commissions rather than following the standard intrastate practice of “qualifying” the offering with state regulators.  The exemptions...
This entry is filed under Bad Actor, Crowdfunding, Rule 506(c), SEC, Securities Law, Blog
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March 03, 2014 by Andrew Hanks
CrowdCheck Rolls Out Bad Actor Report For Crowdfunding Issuers http://bit.ly/1eNjJLS
This entry is filed under Bad Actor, Fraud, In The News, Blog
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