Crowdcheck Blog
Insights and information for online capital formation
It’s frustrating. We are all so ready to do crowdfunding. But we have to wait till the SEC and FINRA come up with their rules.
Some US companies can’t wait and they have gone off to seek their fortunes (or at least funding) on foreign crowdfunding portals. Companies thinking of following them should make sure they have all their ducks in a row before they do so.
Warning: this is where things get seriously technical. But it’s important. If you have questions you should talk to a securities lawyer.
Section 5 of the Securities Act of 1933 says that if you sell securities to the public* using the “jurisdictional means” you have to register that offering with…
This entry is filed under Disclosure, Offerings: Traditional Regulation D, Blog
I’m a proud Brit and a proud Virginian (version 1.0) and I see no contradiction there. But it’s as a Brit I’m blogging today. I watched the Olympic Opening Ceremony on Friday night with some Indian and English friends (also Americans 1.0) and a couple of token Americans and I loved the CROWDFUNDING GAMES.
The Beijing ceremonies were huge and impressive and breathtaking. And organized. Boy, were they organized. Everything went off just as planned, and people did exactly what they were supposed to do, in lockstep and as directed. Amazing. But London, with its theme ”It’s for everyone” was equally amazing. It was inclusive: all those kids, all those…
This entry is filed under Disclosure, Securities Law, Blog
From PLI's JOBS Act 2012: What You Need to Know Now
http://bit.ly/M3jJEn
This entry is filed under Disclosure, Video
As we all know, the SEC is in the process of putting together its crowdfunding rules. Various people have been in to chat with the Staff about life, the Nats and oh by the way would you mind not regulating this thing I'm planning to do?
In the course of those discussions, the SEC has been reminding folks of some basic elements of securities regulation that have not changed and will not change with the implementation of the crowdfunding exemption under Section 4(6) of the Securities Act.
One. If you are acting as a stock exchange, you need to register as a stock exchange or an alternative trading system of some kind. Whether you call it a liquidity platform…
This entry is filed under Blog
Whoa, says the SEC. Crowdfunding is going to be legal but it ain't legal yet. Remember what I said about all investment crowdfunding having to be done through registered portals, and because there ARE no registered portals yet, there IS no investment crowdfunding? The SEC has just reminded us of that. So let's reprise. Any kind of "market conditioning," ie, something that makes you want to go lay down your dollars, is an "offer" of securities. All offers and sales of securities must be registered under the Securities Act or covered by an available exemption. The exemption that is GOING to be available for crowdfunding is Section 4(6) of the Securities…
This entry is filed under Blog
The SEC today announced that it would start accepting comments from the public on the rulemaking it has to undertake under the JOBS Act, even before it proposes any rules. When it does propose rules, you'll get a chance to comment on them, but this is an opportunity to help shape the rules before they are proposed.
You can ask for a meeting with the SEC, or you can send in written comments.
If you're planning to engage with the SEC, here are a few tips to bear in mind:
1. The SEC is looking for specificity. Contact the Staff to alert them to a particular problem, or a particular solution. Saying things like "the Staff should bear in mind the need to…
This entry is filed under Blog
Yesterday on his Rolling Stone blog, Matt Taibbi took a swing at the JOBS Act, but missed and missed hard. Mr. Taibbi asks “how does a law exempting a Silicon Valley startup from independent accounting actually encourage investment?” Well, it wouldn’t help encourage investment if that’s what it did. It doesn’t. No-one is being exempted from independent accounting. Nor are they being permitted to go to market “without publishing real numbers.” Still less are they being permitted to “make their projections up on the backs of envelopes.”
Mr. Taibbi is constructing a whole battalion of straw men and stabbing them to death with his Pointy Pen of Outraged but…
This entry is filed under Blog
The President has just (like, a minute ago) signed the JOBS Act of 2012, which includes the authorization for crowdfunding.
So when can we actually start crowdfunding? NOT YET, and please folks, let’s be careful out there. Some cautionary lawyer-talk after the jump.
Two things need to happen before Crowdfunding Launch Date. First, the SEC has to adopt its crowdfunding rules. And second, it has to register funding portals. Because offers and sales of crowdfunded securities cannot be made except through registered portals. (And notice I said “offers” there. More on that below.)
The SEC has 270 days to adopt its rules, which would take us to the end of the year.…
This entry is filed under Blog
1. Know what you are buying
Startups can offer equity or debt, or different classes of shares with different rights. Understand what you are buying and what rights you have. In an equity investment, the investor becomes a shareholder, and owns a small part of the business. Whether the shareholder has a vote or not depends on what sort of shares the startup is offering, and you might not have any say in the company's direction. Until the company "goes public" and does an IPO, the only way to get any of your money back is through the private markets: finding an accredited investor (someone rich) to buy your shares, selling the shares back to the company (if…
This entry is filed under Blog
Not sure about some of the crowdfunding provisions in the JOBS Act? Well, we'll be providing a plain-language summary of the Act on this site very soon. In the meantime, a couple of the Senators most concerned with crowdfunding have made some very helpful comments that clarify, for example, that crowdfunding portals are allowed to perform due diligence services, and act as holder of record for crowdfunded investments. See Thursday's Congressional Record.
This entry is filed under Blog