Online offerings and Regulation S: EB-5 offerings
I first started going on about Regulation S and online offerings back in 2012, when I noticed that US companies were doing offerings theoretically “outside” the United States without paying any attention to the requirements of US securities law. Then CrowdCheck started working on EB-5 offerings, and we were absolutely appalled at the ignorance of securities law in […]
Federal antifraud liability in intrastate crowdfunding offerings
Wait, what? You thought intrastate offerings were exempt from federal securities law? Only bits of it. The “intrastate exemption” for offerings made within a specific state is only an exemption from the laws that govern registration with the SEC. There is NEVER any exemption from the antifraud laws. If you use the “jurisdictional means” (eg telephones or the intertubes, even behind […]
Getting ready for seeking investment: Part 5 — Are you in “good standing”?
Here’s another sad story from our “fail files” although it has a happy ending. Entrepreneurs seeking outside investment may have seen references in subscription agreements (the agreements in which the investors agree to invest in the company and the company agrees to sell them shares or notes) to “being in good standing”. This means being […]
Deconstructing the meta crowd: not one crowd but many
How’s that for a title for a senior thesis at a liberal arts college? Point is, though, that there is no crowd in crowdfunding. There’s not one crowd but many crowds, and whether securities crowdfunding is going to work as expected depends which crowd shows up on any given day. Advocates of securities crowdfunding long […]
Investing in stupid stuff: our inalienable right
Lawyers will know the name of Louis Loss, one of the gods of securities regulation. From one of his key works, writing about the Securities Act of 1933: In short, Congress did not take away from the citizen “his inalienable right to make a fool of himself.” It simply attempted to prevent others from making […]
Is securities crowdfunding going to be impossible for some small businesses?
Got your attention? Good, because it doesn’t seem that anything else has. Look small businesses, here’s the thing. Congress told the SEC to propose rules for securities crowdfunding. The SEC’s rules have been posted here for a while and the comment period ends in a few days. There have been quite a few comments. Some are sensible, many […]
Regulation CF: funding portals can charge commissions!
Not everyone outside CrowdCheck HQ has finished reading the SEC’s 6,000 page proposals for securities crowdfunding yet. So they may not have picked up on the fact that yes, indeed, crowdfunding portals would be able to charge commissions to companies raising money on their platforms under the proposals. (And although the SEC hasn’t said it, they will […]
Entrepreneurs: build your crowdfunding networks; just don’t talk to them about crowdfunding!
The SEC’s proposals for crowdfunding are out, and entrepreneurs are getting advice about how to be ready for securities crowdfunding. One good piece of advice is to start building that crowd now. Another piece of advice that is sometimes omitted? Do not tell the crowd that you will be pursuing crowdfunding. See, telling people that you are […]
Investors: Know your online securities platforms
Exciting times, eh? With the lifting of the ban on “general solicitation” for offerings to accredited (rich) investors, all sorts of great start-up companies are advertising for investors. Who knew there were that many organic ice cream companies out there? So accredited investors looking to invest small amounts to boost America’s small businesses are able to see […]
New crowdfunding police not simply a concern for shady operators
Massachusetts has a new securities department devoted entirely to monitoring the investment crowdfunding industry. This is an important milestone for an industry that depends on a high level of public trust in order to thrive. The Internet Crowdfunding and Offering Watch Department, or I-CROWD, will initially focus on new Reg. D Rule 506(c) offerings. Effective […]