For Immediate Release: April 2, 2012
Contact for media inquiries: Abigail Gardner | firstname.lastname@example.org | 202.464.6603
Washington, DC- Today Sara Hanks, securities attorney and cofounder of CrowdCheck, applauded the JOBS Act for expanding crowdfunding investments to for-profit businesses, but cautioned that entrepreneurs and investors must be vigilant against possible fraud in the marketplace.
President Obama is expected to sign the legislation into law soon. Hanks, the former general counsel for the Congressional Oversight Committee for TARP that monitored the federal banking bailout, said the new law will strike a good balance between allowing the Internet to harness the potential of US entrepreneurs and small investors while protecting the nascent market from fraud.
“The new law will unleash the power of the Internet to bring investors and entrepreneurs together without the established financial institutions calling all the shots,” said Hanks. “But everybody needs to be vigilant. Whenever money is involved, you can expect to see fraud.”
The JOBS Act includes language requiring the Securities and Exchange Commission to regulate the crowdfunding marketplace. If properly regulated and implemented, crowdfunding will democratize access to capital and revolutionize investment for startup businesses, Hanks said.
Hanks praised the leadership of Senators Michael Bennet (D-Co.), Jeff Merkley (D-OR), Mary Landrieu (D-LA), and Scott Brown (R-MA) for considering the safety and security of the new market.
But Hanks said that it will still be up to investors and entrepreneurs to protect themselves from deals that are too good to be true and entrepreneurs who over-promise.
“Crowdfunding is going to usher in a totally new, collaborative and democratic form of capitalism. Small businesses and start ups are looking for capital, and crowdfunding is going to change the dynamic of investing and lending. Big financial players and multi-million dollar investors won’t be the only entities in the game anymore,” said Hanks.
As a former securities attorney in government and private practice, Hanks has an extensive 30-year career helping companies raise funds and using forensic accounting to protect investors from fraudulent businesses.
CrowdCheck is a company founded by Sara Hanks and business lawyers with legal and start-up backgrounds to help entrepreneurs access capital and protect investors. CrowdCheck helps companies navigate disclosures and filings, and performs due diligence checks on startups to protect investors and the startups themselves. The company recently launched CrowdCheck.biz, a site for entrepreneurs and investors looking for transparent crowdfunding investments.