“Securities Are Sold, Not Bought—But Reg CF Marketing Has Rules: The SEC’s New Reg CF C&DI Guidance”
Advertising and marketing are crucial for Regulation Crowdfunding offerings. As the old sales adage goes – “Securities are sold, not bought.” But marketing an offering compliantly is just as important as the marketing itself, as few activities can get an issuer in regulatory hot water faster than running afoul of the SEC’s rules on promoting […]
“One and done” SPV reporting? Really?
It’s Form C-AR filing season again, and maybe time to discuss an interesting consequence of using a crowdfunding special purpose vehicle (“SPV”). These are used in roughly one quarter of all Regulation CF filings, according to the analysis of our colleagues at Kingscrowd. Everyone in crowdfunding knows that once a company has taken money from […]
Integration Pitfalls: Navigating Rule 152 When Moving from Reg CF to Reg A
Integration of securities offerings can be a tricky and often frustrating challenge. You may plan to conduct an offering one way, only to discover that you now have to comply with rules and restrictions that are different, or more severe than you were expecting. This is the situation for companies transitioning from a Regulation Crowdfunding […]
1% from the 1%
So we’ve seen a drop in crowdfunding raises recently. According to the SEC, between 2023 and 2024, Reg A raises are down 52% in numbers, Reg CF raises are down 25% and Regulation D raises are down 7%, and between 2021 and 2024 the figures are down 63% for Reg A, 5% for Reg CF, […]
Crowdfunding is for everyone.
One thing I will never get tired of working in this space is the variety of companies that have been able to effectively utilize offerings under Regulation CF and Regulation A. These exemptions are versatile, and allow for companies to raise funds whether they have no interest in being more than a neighborhood restaurant, or […]
Lesson of the Month: The black box acquisition
Following up from last month’s I’m-not-going-to-call-it-fraud series, here’s another recent one. As always, identifying details changed. This one’s (problem is a clear omission of information required by the form filed with the SEC.) Form C says that if you raise funds in order to acquire another company, you must provide the target’s financials. This one […]
Regulation CF fraud: Destiny Robotics
This is mostly a classic run-away-with-the-money case, combined with a bunch of misleading statements and omissions. But there are a couple of interesting twists here. What happened: Destiny Robotics Corp. raised funds under Regulation CF. The company used Wefunder’s “Lead Investor” structure, where the securities are held in an SPV and the Lead Investor makes […]
Lesson of the Month: The non-CFO
I was thinking of calling this series “Fraud of the Month” but didn’t want to go that far. You may reach your own conclusions as to whether that tag is warranted in any particular instance. While names and identifying details are changed, this is a true and recent story. Company raised funds in a Reg […]
Reg CF Resale Restrictions: When & How You Can Sell Crowdfunding Securities
Understanding Reg CF Resale Restrictions General rule: if you read the SEC rules with blinders on, you are probably well on your way to getting yourself in trouble. Rule 501 of Regulation Crowdfunding states that shares issued in a Regulation Crowdfunding offering “may not be transferred by any purchaser of such securities during the one-year […]
Raising funds under Reg CF for acquisitions
There’s an interesting contrast between Regulation A and Regulation CF in terms of disclosure. Reg A requires that issuers provide financial statements for “businesses acquired or to be acquired.” Even if that’s not what the money is being raised for. If you just acquired, or are probably going to acquire, a business (and it doesn’t […]