Tag Archives: FINRA

RealtyShares Equity Crowdfunding Site Raises $32.9 Million for Midwest Commercial Real Estate Projects in Illinois, Ohio and Wisconsin

8 Mar

Buckeye commercial real estate investment opportunities are showing a significant level of activity, with $12.25 million raised for 30 deals in Ohio, concentrating around the Cincinnati and Cleveland metropolitan areas

By Robert Hoskins

Chicago, Illinois – RealtyShares is transforming the real estate investment landscape by connecting borrowers and sponsors to debt and equity capital from accredited and institutional investors, across an array of financing products. For example, the equity crowdfunding site for commercial real estate deals has released new data showing the extent of crowdfunded investments in several Midwest real estate markets.

 Infographic for Commercial Real Estate Crowdfunding

Commercial real estate developers, sponsors and borrowers in Ohio, Wisconsin, Michigan, Indiana and Illinois have raised $32.9 million to date from RealtyShares’ network of investors

To date, commercial real estate developers, sponsors and borrowers in Ohio, Wisconsin, Michigan, Indiana and Illinois have raised $32.9 million to date from RealtyShares’ network of investors, offering a source of financing for real estate projects by leveraging technology to connect potential investors with expertly vetted real estate deals.

“RealtyShares fits into a world in which it is more difficult than in previous decades to secure a loan for development from a bank, and where technology is creating possibilities for people across the country to assess information and connect with one another,” said Gerald Fogelson, Advisor to RealtyShares, CEO of Fogelson Group and an inductee of the Chicago Real Estate Hall of Fame. He recently joined the team bringing decades of real estate knowledge and experience to the emerging tech company.

Thus far 114 deals have been funded in the region through RealtyShares, with an average deal price of $288,000. Deals of up to $1.5 million have been financed in both Columbus, Ohio, and Chicago, Ill. Anchoring RealtyShares’ position in the region, $14 million has been raised for 53 deals in Illinois, with several investors targeting properties in and around Chicago. Buckeyes are also showing a significant level of activity, with $12.25 million raised for 30 deals in Ohio, concentrating around the Cincinnati and Cleveland areas.

“What we’re seeing now is that investors throughout the United States are interested in investing in markets like the Midwest, where small businesses and entrepreneurs are looking beyond their friends and family networks to raise money,” said Fogelson. “RealtyShares makes all that possible.”

Platinum Real Estate Holdings has been one of the leading deal sponsors in the Midwest, with twelve Michigan properties funded through RealtyShares platform totaling $378,000.

“Our business is built on acquiring and flipping low-cost homes in the metropolitan Detroit area on a short time frame,” said Anthony Rea, owner of Platinum. “RealtyShares has enabled us to raise financing quicker and more efficiently than traditional bank loans, which is a major asset in a market with low inventory and high demand from buyers.”

Hamilton Real Estate Capital is also among the Midwest developers that have funded multiple real estate projects through the RealtyShares marketplace. “Working with RealtyShares has given us access to a new group of investors in a straightforward and quick process,” Eli Glanz, Principal at Hamilton confirmed.

The Midwest continues to be a target market, especially in states where the company’s rates are competitive against traditional financing options.

“The Midwest is a very hot market,” said Kelly McDonald, the Vice President of Residential Debt at RealtyShares. “There is substantial inventory and a concentration of older neighborhoods that could use updates. We’re seeing homes that have been owned for 30 years that have a lot of potential.”

To date, the RealtyShares network of investors has funded upwards of $300 million across more than 550 investment opportunities on the platform, funding residential and commercial projects in 35 states.

Private investments are highly illiquid and risky and are not suitable for all investors. Through the RealtyShares website, these investors can browse investment opportunities, perform due diligence, invest online and have 24/7 access to an investor dashboard to watch how their investments are performing.

RealtyShares offers securities through North Capital Private Securities Corporation, member FINRA/SIPC.

For more information on how to become a real estate investor or to seek capital through the RealtyShares marketplace, please visit www.realtyshares.com.

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Robert Hoskins, a seasoned Front Page PR veteran provides more than twenty-five years of external communications, media relations, digital social media and SEO skills to Front Page PR’s crowdfunding PR and media relations service portfolio.
Robert Hoskins
(512) 627-6622
@Crowdfunding_PR


Mr. Robert Hoskins is a seasoned marketing veteran with a proven track record of helping entrepreneurs, startups, small businesses as well as Fortune 500 corporations launch successful marketing communications campaigns to gain market traction for a wide variety of products and services.
On a regular basis, Mr. Hoskins consults with crowdfunding campaign managers as well as crowdfunding sites, portals and platforms to deliver successful crowdfunding marketing campaigns.
Google search “Robert Hoskins Crowdfunding” to see why Mr. Hoskins is considered one of the industry’s foremost crowdfunding experts that has amassed a huge social media following, which is dedicated to supporting donation-, rewards- and equity-based crowdfunding campaigns.

SEC Details Rules for Title III Crowdfunding Investors and Crowdfunding Investment Sites

31 Oct

The SEC’s final Title III Crowdfunding Rule (Regulation Crowdfunding) will enable individuals to purchase securities in crowdfunding offerings subject to certain limits, require companies to disclose certain information about their business and securities offering, and create a regulatory framework for the intermediaries facilitating crowdfunding transactions

Chair Mary Jo White Gives an Overview of Title III Crowdfunding Rules

Chair Mary Jo White Gives an Overview of Title III Crowdfunding Rules

By Robert Hoskins

SEC’s Title III of the JOBS Act 

On Friday, October 30, 2015, the SEC passed the final Title III Regulation Crowdfunding Rule that will allow the offer and sale of securities through crowdfunding.  The new rules will give small businesses an additional avenue to raise capital and provide investors with important protections.  If adopted, this would complete the Commission’s major rulemaking mandated under the JOBS Act.

Title III Crowdfunding Investor Rules

The recommended rules would, among other things, enable individuals to purchase securities in crowdfunding offerings subject to certain limits, require companies to disclose certain information about their business and securities offering, and create a regulatory framework for the intermediaries facilitating crowdfunding transactions.  More specifically, the recommended rules would:

  • Permit a company to raise a maximum aggregate amount of $1 million through crowdfunding offerings in a 12-month period;
  • Permit individual investors, over a 12-month period, to invest in the aggregate across all crowdfunding offerings up to:
    • If either their annual income or net worth is less than $100,000, than the greater of:
      • $2,000 or
      • 5 percent of the lesser of their annual income or net worth.
    • If both their annual income and net worth are equal to or more than $100,000, 10 percent of the lesser of their annual income or net worth; and
  • During the 12-month period, the aggregate amount of securities sold to an investor through all crowdfunding offerings may not exceed $100,000.

Under the recommended rules, certain companies would not be eligible to use the exemption.  Ineligible companies would include non-U.S. companies, Exchange Act reporting companies, certain investment companies, companies that are subject to disqualification under Regulation Crowdfunding, companies that have failed to comply with the annual reporting requirements under Regulation Crowdfunding during the two years immediately preceding the filing of the offering statement, and companies that have no specific business plan or have indicated that their business plan is to engage in a merger or acquisition with an unidentified company or companies.

Securities purchased in a crowdfunding transaction generally could not be resold for one year.  Holders of these securities would not count toward the threshold that requires a company to register its securities under Exchange Act Section 12(g) if the company is current in its annual reporting obligations, retains the services of a registered transfer agent and has less than $25 million in total assets as of the end of its most recently completed fiscal year.

In addition, all transactions relying on the new rules would be required to take place through an SEC-registered intermediary, either a broker-dealer or a funding portal.

Title III Crowdfunding Company Disclosures 

Companies that rely on the recommended rules to conduct a crowdfunding offering must file certain information with the Commission and provide this information to investors and the intermediary facilitating the offering, including among other things, to disclose:

  • The price to the public of the securities or the method for determining the price, the target offering amount, the deadline to reach the target offering amount, and whether the company will accept investments in excess of the target offering amount;
  • A discussion of the company’s financial condition;
  • Financial statements of the company that, depending on the amount offered and sold during a 12-month period, are accompanied by information from the company’s tax returns, reviewed by an independent public accountant, or audited by an independent auditor.  A company offering more than $500,000 but not more than $1 million of securities relying on these rules for the first time would be permitted to provide reviewed rather than audited financial statements, unless financial statements of the company are available that have been audited by an independent auditor;
  • A description of the business and the use of proceeds from the offering;
  • Information about officers and directors as well as owners of 20 percent or more of the company; and
  • Certain related-party transactions.

In addition, companies relying on the crowdfunding exemption would be required to file an annual report with the Commission and provide it to investors.

Title III Crowdfunding Rules for Portals

A funding portal would be required to register with the Commission on new Form Funding Portal, and become a member of a national securities association (currently, FINRA).  A company relying on the rules would be required to conduct its offering exclusively through one intermediary platform at a time.

The recommended rules would require intermediaries to, among other things:

  • Provide investors with educational materials that explain, among other things, the process for investing on the platform, the types of securities being offered and information a company must provide to investors, resale restrictions, and investment limits;
  • Take certain measures to reduce the risk of fraud, including having a reasonable basis for believing that a company complies with Regulation Crowdfunding and that the company has established means to keep accurate records of securities holders;
  • Make information that a company is required to disclose available to the public on its platform throughout the offering period and for a minimum of 21 days before any security may be sold in the offering;
  • Provide communication channels to permit discussions about offerings on the platform;
  • Provide disclosure to investors about the compensation the intermediary receives;
  • Accept an investment commitment from an investor only after that investor has opened an account;
  • Have a reasonable basis for believing an investor complies with the investment limitations;
  • Provide investors notices once they have made investment commitments and confirmations at or before completion of a transaction;
  • Comply with maintenance and transmission of funds requirements; and
  • Comply with completion, cancellation and reconfirmation of offerings requirements.

The rules also would prohibit intermediaries from engaging in certain activities, such as:

  • Providing access to their platforms to companies that they have a reasonable basis for believing have the potential for fraud or other investor protection concerns;
  • Having a financial interest in a company that is offering or selling securities on its platform unless the intermediary receives the financial interest as compensation for the services, subject to certain conditions; and
  • Compensating any person for providing the intermediary with personally identifiable information of any investor or potential investor.

Regulation Crowdfunding would contain certain rules that are specific to registered funding portals consistent with their more limited activities than that of a registered broker-dealer.  The rules would prohibit funding portals from, among other things: offering investment advice or making recommendations; soliciting purchases, sales or offers to buy securities; compensating promoters and other persons for solicitations or based on the sale of securities; and holding, possessing, or handling investor funds or securities.

The rules would provide a safe harbor under which funding portals could engage in certain activities consistent with these restrictions.  The rules also would require funding portals to maintain certain books and records related to their transactions and business.

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FlashFunders Launches Leading No Fee Equity Crowdfunding Site to Fund Startups in the United States

24 Feb

No-Fee Platform Helps Connect Accredited Investors to Innovative Entrepreneurs, Startups and Businesses Seeking Investment Capital

By Robert Hoskins

Santa Monica, California – FlashFunders announced the launch of its no-fee, online equity funding platform at www.flashfunders.com.  FlashFunders (member FINRA/SIPC) was started by Europlay Capital Advisors, law firm Stubbs Alderton & Markiles, and co-founders Vincent Bradley and Brian Park, and was formed to help startups raise capital efficiently while also opening up access to startup investing for accredited investors.

Vincent Bradley, the co-founder and CEO of FlashFunders, tells us more about equity crowdfunding

Vincent Bradley, the co-founder and CEO of FlashFunders, tells us more about equity crowdfunding

FlashFunders’ platform helps entrepreneurs navigate complex SEC regulations and offsets costly legal fees, while giving accredited investors unprecedented access to startup investment opportunities. FlashFunders provides a turnkey solution for raising capital and a marketplace where entrepreneurs can connect directly with accredited investors across the globe.

FlashFunders ensures all investors are accredited and that all offerings are SEC-compliant and executed using FDIC-insured escrows — which are created and paid for by FlashFunders.

“We worked with FINRA over the past year to expand the scope of our broker-dealer license, allowing FlashFunders to operate an online equity funding platform in a regulated environment,” said Vincent Bradley, the co-founder of FlashFunders. “We felt it was critical to ensure our platform was compliant for both startups and investors. Online equity funding is in its infancy and seeing tremendous growth; by engaging with FINRA, we’re leading the way for how it should be done — creating an industry standard.”

“Approximately 97% of the 8.5 million accredited investors in the United States currently don’t partake in startup investing,” said Mark Dyne, the chairman and founder of Europlay, a seed and early-stage investor in technology companies, as well as former Skype seed investor and board member and founder and CEO of Sega Ozisoft, Virgin Interactive Entertainment, and many others. “This is largely because they don’t have access to early stage companies. Leveraging technology and decades of combined experience in finance, venture investing, securities law and startup operations, FlashFunders provides entrepreneurs and investors a secure, SEC-compliant user experience, with e-Signature technology and document management capabilities backed by a team of FINRA-registered representatives to help ensure successful offerings on the platform.”

“FlashFunders is designed to fundamentally alter the capital-raising process,” said Brian Park, co-founder of FlashFunders. “We provide startups with a compliant, efficient and no-fee online equity funding platform to develop their business plans, publicly market their offerings and collect funding from accredited investors —saving startups thousands of dollars in legal fees. At the same time, investors on FlashFunders can purchase shares directly in startups with no transaction fees or carried interest charges.

FlashFunders creates a safe and intuitive process that allows investors to view startup offerings and execute investments legally and properly in minutes using Flash Seed Preferred documents and e-Signature technology.

FlashFunders has created “Flash Seed Preferred,” a set of safe, balanced and transparent investment documents that have been customized to facilitate fundraising on the platform, further streamlining a process that would otherwise take months of road shows, multiple middlemen and tens of thousands of dollars in legal fees to execute.

“Unlike other equity funding portals, FlashFunders does not curate or try to pick winners, and investments are not made through LLCs or Special Purpose Vehicles,” said Scott Alderton, Managing Partner at Stubbs Alderton & Markiles, LLP. “FlashFunders provides a seamless end-to-end solution for startups raising capital with virtually no external cost, fees or investor carry. FlashFunders receives an ongoing right to invest a limited amount under the same terms as all other investors if a startup is successful in getting funded on the platform.” Stubbs Alderton & Markiles, LLP is one of southern California’s leading business law firms, with deep experience in providing legal services to companies including LinkedIn, Beats by Dre and Skype, among many others.

The announcement is the first phase of FlashFunders’ rollout. Additional enhancements to the user experience will be added over time along with new tools and technologies to increase functionality and scale. Offerings from startups will be incrementally uploaded by the site’s concierge service, which assigns a live team to guide entrepreneurs through the process.

“We are educating a new generation of investors and building a more efficient roadshow for startups,” said Vincent Bradley.

A registered broker-dealer, member FINRA/SIPC, FlashFunders provides a no-fee online equity funding platform for entrepreneurs to publicly market their offerings, collect funding from accredited investors and gain access to SEC-compliant legal documents and escrow accounts to create their offerings.

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Equity Crowdfunding Service Providers (CSPs) Needed to Support the Growing Number of Texas Crowdfunding Portals (TCPs) and Texas Crowdfunding Issuers (TCIs)

4 Dec

Join the Texas Crowdfunding Network of securities attorneys, certified financial advisors, securities sales professionals, investment advisors, escrow agents, certified public accounts for Texas issuers

 By Robert Hoskins

Dallas, Texas – Front Page PR announced that the firm is seeking Equity Crowdfunding Service Providers to partner with in order to serve the growing number of Texas Equity Crowdfunding Portals and their Private Placement Memorandum (PPM) Issuers.

The firm is seeking to build an in-depth Texas Crowdfunding Network of securities lawyers, certified financial advisors, brokers, registered representatives, securities sales professionals, investment advisors, banking escrow agents and many other types of ancillary crowdfunding service providers that are authorized to operate within the guidelines of the Texas Intrastate Crowdfunding Exemption Rules.  Click here to join

Texas Crowdfunding Portals, Issuers and Service Providers

Texas Crowdfunding Portals, Issuers and Service Providers

“Per the Texas Intrastate Crowdfunding Exemption Rules, the top equity crowdfunding sites serving Texas are not allowed to provide any type of guidance or consulting services to their private placement issuers,” said Robert Hoskins, Front Page PR’s Director of Crowdfunding. “These service providers will be needed to help is setup corporate structures, write PPMs, select the most appropriate offering structures, establish accurate offering valuations, set up escrow accounts at Texas banks and ensure that offerings meet strict Texas and SEC securities laws.”

The goal of the Texas Crowdfunding Network is to build the beginning foundation for the brand new Texas crowdfunding industry. As with any new industry aligning the fragmented players and putting them into streamlined business directory where all the players can find each other is critical. This will allow TCI’s to find third-party CSPs that will help them put together their PPMs prior to registering their offering with a leading TCP.

The majority of TCPs are still in the process of filling out their Texas State Securities Board Registration forms. Once filed it will still take several weeks to be approved by the state. In the mean time portals are actively recruiting both accredited and unaccredited investors as well as PPM issuers.

Due to the fact that PPM issuers will need help putting together their financial paperwork and the legal rules that prevent portals for giving any guidance, there is a real need for a database of marketing, legal, securities, investment, investor relations, financial planners, document preparation and banking escrow professionals that issuers can turn to get their paperwork in order.

Financial Industry Regulatory Authority (FINRA)

To give newcomers some insight into the securities and investment industry, here are some FINRA definitions of the various players and their typical roles in the fundraising and investment process:

Brokers:

  • What they are:  While many people use the word broker generically to describe someone who handles stock transactions, the legal definition is somewhat different—and worth knowing. A broker-dealer is a person or company that is in the business of buying and selling securities—stocks, bonds, mutual funds, and certain other investment products—on behalf of its customers (as broker), for its own account (as dealer), or both. Individuals who work for broker-dealers—the sales personnel whom most people call brokers – are technically known as registered representatives.
  • What they offer:  Broker-dealers vary widely in the types of services they offer, falling generally into two categories—full-service and discount brokerage firms. Full-service firms typically charge more for each transaction, but they tend to have large research operations that representatives can tap into when making recommendations, can handle nearly any kind of financial transaction you want to make, and may offer investment planning or other services.Discount broker-dealer firms are usually cheaper, but you may have to research potential investments on your own—though the broker-dealer Web sites may have a lot of information you can use.Registered representatives are primarily securities salespeople and may also go by such generic titles as financial consultant, financial adviser, or investment consultant. The products they can sell you depend on the licenses they hold.For example, a representative who has passed the Series 6 exam can sell only mutual funds, variable annuities, and similar products, while the holder of a Series 7 license can sell a broader array of securities. When a registered representative suggests that you buy or sell a particular security, he or she must have reason to believe that the recommendation is suitable for you based on a host of factors, including your income, portfolio, and overall financial situation, your tolerance for risk, and your stated investment objectives.

Investment Advisers:

  • What they are:  An investment adviser is an individual or company who is paid for providing advice about securities to their clients. Although the terms sound similar, investment advisers are not the same as financial advisers and should not be confused. The term financial adviser is a generic term that usually refers to a broker (or, to use the technical term, a registered representative).By contrast, the term investment adviser is a legal term that refers to an individual or company that is registered as such with either the Securities and Exchange Commission or a state securities regulator. Common names for investment advisers include asset managers, investment counselors, investment managers, portfolio managers, and wealth managers. Investment adviser representatives are individuals who work for and give advice on behalf of registered investment advisers.
  • What they offer:  In addition to providing individually tailored investment advice, some investment advisers manage investment portfolios. Others may offer financial planning services or, if they are properly licensed, brokerage services (such as buying or selling stock or bonds)—or some combination of all these services.

Accountants:

  • What they are:  Accountants are trained to provide professional assistance to individuals and companies in areas including tax and financial planning, tax reporting, auditing, and management consulting.
  • What they offer:  A CPA can help you consider the tax implications of financial decisions you make and assist with other tax-related issues, such as preparing annual tax returns. Some CPAs are also certified by the AICPA as Personal Financial Specialists (PFSs), which means they have met AICPA’s education requirements for providing financial planning services, including assessing your overall financial situation, developing a budget, setting goals for saving and investing, and developing a plan for monitoring your progress and reaching your goals.

Lawyers:

  • What they are:  A lawyer is licensed to give legal advice to clients. Lawyers are trained to tell you about the legal impact one financial planning or investment decision might have on another—such as the tax implications of setting up a certain type of trust for your estate.
  • What they offer:  As with other professionals, the range of services lawyers can provide will vary greatly from individual to individual. For example, if one of your financial goals is leaving your assets to particular people or organizations, you will want to work with a lawyer who specializes in estate planning.

Financial Planners:

  • What they are:  Financial planners can come from a variety of backgrounds and offer a variety of services. They could be brokers or investment advisers, insurance agents or practicing accountants—or they have no financial credentials at all. Some will examine your entire financial picture and help you develop a detailed plan for achieving your financial goals. Others, however, will recommend only the products they sell, which may give you a limited range of choices.
  • What they offer:  The breadth and depth of services a financial planner offers will vary from provider to provider. Some create comprehensive plans that delve into every aspect of your financial life, including savings, investments, insurance, college savings, retirement, taxes and estate planning. Others have a more limited focus, such as insurance or securities. Some only prepare plans, while others also sell investments, insurance, or other products. If they sell products, their recommendations typically will correspond with the products or services they sell.For example, an insurance agent will tell you about insurance products (such as life insurance and annuities) but likely won’t discuss other investment choices (such as stocks, bonds or mutual funds). You’ll want to make certain you fully understand which areas of your financial life a particular planner can—and cannot—help with before you hire that person.

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Contact:
Robert Hoskins

Front Page PR
(512) 627-6622
@Crowdfunding_PR
@FrontPage_PR

hyperfund Launches Business Crowdfunding Site that Makes It Easy for Investors to Find, Research and Invest in Private Business Equity Deals

9 Jul

hyperfund offers crowdfunding site where businesses at any stage of the growth cycle can find and reach potential investors using crowdfunding advertising, email marketing, PR and social media campaigns

Anacortes, Wash. – hyperfund is a new business crowdfunding marketplace where investors can easily find, research and invest in private businesses. It is a crowdfunding site where entrepreneurs can easily and efficiently reach a large number of potential investors and is one of the first crowdfunding platform providing all three primary strategies for businesses raising capital on the internet with rewards, security, and debt crowdfunding options.

hyperfund enables entrepreneurs, startups as well as growing businesses to take advantage of the explosive growth of crowdfunding campaigns and leverage the power of the SEC’s new General Solicitation Rules that allow private companies to market their equity investment opportunities to millions of accredited investors via advertising, marketing, PR and social media programs.

Hyperfund Local National Crowdfunding for both Rewards and Equity Based Crowdfudning Campaigns

Hyperfund Local National Crowdfunding for both Rewards and Equity Based Crowdfudning Campaign

The investing ecosystem continues to evolve as traditional sources of funding, angel investors and venture capitalists, focus more on revenue-producing businesses. At the same time, new technologies enable new ways for growing companies to connect with potential investors. Crowdfunding is becoming a primary solution for pre-revenue businesses to raise capital and most crowdfunding platforms, to date, have only offered investors a single option.

hyperfund offers three different crowdfunding options:

  • Rewards, such as preferential product acquisition opportunities,
  • Security, to participate more directly in a company’s financial growth, and
  • Debt, to be repaid over time.

“Now startups and growing businesses can raise capital on the Internet with a reward-based seed funding round to validate their business model, followed by an equity or debt round on the same platform,” said hyperfund’s CEO Denis duNann. He emphasized, “On hyperfund’s marketplace, investors can now back business-focused rewards rounds, track the businesses performance and potentially invest in a later securities round.”

Luan Cox, CEO at partner company Crowdnetic, stated, “We are impressed with hyperfund’s unique and complete approach to business crowdfunding. The breadth of their offerings addresses the needs of small businesses throughout the growth cycle.” She added, “We are pleased to include their Private Issuers Publicly Raising (PIPR) listings in our marketwatch.com feed, the nation’s first real-time aggregated listing of offerings and pricing information on private issuers raising capital.”

There are no transaction or subscriber fees for investors to research private offerings on hyperfund. There are no upfront fees for entrepreneurs to easily and efficiently reach millions of potential investors.

hyperfund is launching with two recent winners of the Florida Atlantic University’s Business Plan Competition:

  • BiologicsDirect™, the first and only online virtual marketplace that connects blood centers, which are the suppliers of blood products, with hospital and blood center users, positively impacting critical blood-product supply chain management.
  • Owl Educators, with its breakthrough online service, connects tutors and students, making their educational relationship more effective and efficient.

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Licensed Broker-Dealer Signs Deal with Due-Diligence Services Provider to Provide CUSIP Identifiers for Private Placement Offerings

18 May

WealthForge will be the first broker-dealer to offer CUSIP identifiers for private offerings

 By Robert Hoskins

New York, NY – CUSIP Global Services (CGS) and WealthForge announced acollaborationin the registrationofCUSIP identifiers for private placement offerings.   Meant to serve the rapidly growing market for online capital formation colloquially known as “crowdfunding,” this joint initiative will bring the precision and reliabilityofCUSIP identifiers to a new sector of the market.

WealthForge will be the first broker-dealer to offer CUSIP identifiers for private offerings

WealthForge will be the first broker-dealer to offer CUSIP identifiers for private offerings

Useful primarily for trade communication as well as clearing and settlement activities, CUSIPs for Crowdfunding will function like CUSIPs for other types of securities, and will feature the same 6-character issuer and 9-character issue format upon which so many market participants have come to rely.  CUSIPs for Crowdfunding are available upon request for most offerings with valid support documentation.

“Making CUSIPs available to private placements adds credibility and legitimacy to this emerging asset class, making crowdfunding more like existing markets,” said Mat Dellorso, CEO of WealthForge. “Just as publicly traded securities are easy to find and easy to track through a CUSIP, we believe the same should be true of these new online securities. This partnership will make that possible.”

In addition to the functionality available through WealthForge’s portals, CUSIPs for Crowdfunding are available via a jointly promoted website, .

“We are pleased to enter this new market with WealthForge as a partner,” said Jim Taylor, Managing Director and Head of CGS. “With the support of our industry-appointed Board of Trustees, it is CGS’ mandate to bring the efficiency and reliability of CUSIP identifiers and descriptive data to new markets – Crowdfunding is a natural extension of that philosophy.”

WealthForge will be the first broker-dealer to offer CUSIP identifiers for private offerings.

Added Dellorso, “In the near term, we are focused on enabling our partners to better communicate and promote their offerings to potential investors. In the long-term, our vision is to create increased liquidity opportunities for private securities – a CUSIP on each one is an important step toward achieving that goal.”

WealthForge Holdings, Inc. is a firm that enables online private investments – investments made in companies, particularly small businesses and startups, that are not on a public exchange. WealthForge provides the technology and oversight needed to complete these private investment transactions within SEC regulations through its wholly-owned licensed broker-dealer subsidiary.

Some of WealthForge’s services include compliance, investor verification, transaction processing, shareholder services and access to larger pools of capital. WealthForge’s broker-dealer subsidiary has been operating as a member of the Financial Industry Regulatory Authority (FINRA) since 2009.

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Second Equity Crowdfunding Investing Portal, PennStarter, Begins Advertising Private Placements Under the JOBS Act

19 Feb

PennStarter carves out niche in the equity funding world, connecting qualified investors to early-stage public and private companies

By Robert Hoskins

PennStarter, based in Coeur d’Alene, Idaho, states that the 2012 JOBS Act began allowing for certain equity funding raises to be advertised through exemption Regulation D, Rule 506(c) in September, 2013. The PennStarter portal is focused on early-stage public and private companies.

PennStarter Equity Crowdfunding Platform and Broker Dealer

PennStarter Equity Crowdfunding Platform and Broker Dealer

While many broker-dealers and issuers have been reluctant to utilize advertising as they must verify the accreditation of their investors when relying on this exemption, the PennStarter portal was designed to make the investment process both open and transparent, while ensuring strict compliance.

Company President Ron Nicklas states, “We have worked hard to put procedures in place to make the process of verifying accreditation as simple for investors as possible. For investors interested in gaining access to quality deals, we believe that the PennStarter platform offers a unique opportunity to connect with early-stage companies.”

PennStarter has carved a niche in the equity funding world, connecting qualified investors to early-stage public and private companies. For companies and their investors, PennStarter offers the security of a FINRA/SIPC member broker-dealer, and thorough due diligence is done prior to listing.

For private companies, PennStarter is uniquely positioned to help properly position them to become publically traded, should they choose to do so. Since one of the typical challenges of investing in private placements is the lack of an exit strategy, this approach has become attractive to investors.

PennStarter is currently working with two companies conducting capital raises utilizing the 506(c) exemption, and which are available only to accredited investors.

  1. Touchpoint Metrics: A fully reporting, early-stage company quoted on the OTCBB under the symbol TPOI. Touchpoint Metrics is a SaaS-based customer experience software and services company working with large, medium and small enterprises to measure and improve the experiences they deliver to their customers.
  2. Funding Wonder: An online lending platform, which blends finance with social networking to provide loans to small businesses. Funding Wonder plans on offering its lending opportunities to both accredited and non-accredited investors utilizing state and federally regulated Crowdfunding after its implementation.

PennStarter is a division of Pennaluna & Company and was launched in late 2013. Pennaluna & Company is a full service stockbroker focused primarily on the mining, metals and Canadian markets since 1926 and many PennStarter opportunities reflect that niche.

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CrowdCheck Offers Crowdfunding Compliance Management for New Reg. D and Accredited Investor Marketing Programs

12 Jul
CrowdCheck CEO Sarah Hanks

CrowdCheck CEO Sarah Hanks

By Sarah Hanks, CrowdCheck’s CEO

Adoption of New Rule 506(c): General Solicitation in Regulation D Offerings

From the CEO’s Desktop:  On July 10 the SEC complied with a mandate in the JOBS Act of 2012 to permit “general solicitation” in private securities offerings. In doing so, the SEC created an entirely new type of securities offering not required to be registered under the Securities Act of 1933. The SEC also adopted rules preventing “bad actors” from participating in private offerings, and proposed for public comment changes to Regulation D and Form D under the Securities Act that are intended to increase investor protection.

Offerings of securities in the United States must be registered with the SEC under the Securities Act or made in compliance with an exemption from registration. Rule 506, part of Regulation D under the Securities Act, is the most used exemption from registration of securities in the United States. The SEC estimates that in 2012 $899 billion was raised in transactions claiming the Rule 506 exemption. New Rule 506(c) Adopted The SEC voted to adopt amendments to Regulation D under the Securities Act to add new Rule 506(c).  Rule 506(c) offerings are technically private placements, made only to “accredited” investors.[1] In the past this has meant not just that accredited investors only could buy the securities, but also that the issuer could offer them to accredited investors only. Under the new rule, small companies and private investment funds and their intermediaries will be able to use “general solicitation” to reach accredited investors, which means they may advertise or publicize an offering on television, in newspapers, and most importantly over the internet. They may talk about the offering on talk shows and webinars, and they may promote the offering on social media. In doing so, however, they will be subject to the anti-fraud provisions of the federal securities laws, which prohibit misleading statements. If the proposals discussed below are adopted, the materials used in general solicitation (which is a very broadly defined concept, including most attempts to condition market interest in an offering) will also be subject to legending requirements. The JOBS Act required the SEC to remove the prohibition on “general solicitation or general advertising,” which has been part of Regulation D since its adoption in 1982, so long as the purchasers in an offering were all accredited.  The way the SEC has implemented this legislative mandate means that there will now be two different types of offering under Regulation D’s Rule 506:

  • Traditional Rule 506(b) offerings, which cannot use general solicitation, but in which up to 35 non-accredited investors can participate so long as they are provided with extensive information about the issuer of the securities, usually in the form of a private placement memorandum or PPM; and
  • New Rule 506(c) offerings, which can use general solicitation, but must be sold to accredited investors only, in which the market will let investors dictate the type of information that they need in order to make informed investment decisions.

The JOBS Act directed the SEC to lift the prohibition on general solicitation provided that all purchasers of the securities were accredited investors and the issuer took “reasonable steps to verify” that the purchasers were accredited, “using such methods as determined by the Commission.”  In its initial proposal the SEC declined to specify even a non-exclusive list of such methods, on the grounds that this would inhibit flexibility in the markets.  However, in the final rule the SEC provided more clarity and established a principles-based method of verification that expects issuers to look at, among other things:

  • The nature of the purchaser and the type of accredited investors the purchaser claims to be;
  • The amount and type of information the issuer has about the purchaser; and
  • The nature of the offering, including the manner in which the purchaser was solicited to participate and the terms of the offering, such as the minimum investment amount.

The SEC makes clear that the issuer should look to the facts and circumstances surrounding the offer and the issuer’s relationship with the investor, and that what will be required to constitute “reasonable steps” will change based on the circumstances. For example, offerings with high minimum cash investments might require less additional investigation than offerings with lower minimums, provided there are no facts to indicate that a third party is financing the purchase. The SEC also provided a non-exclusive list of methods the issuer could use to verify that a natural person meets the accredited investor requirements of 506(c). These methods are:

  • If verifying whether a purchaser qualifies on the basis of income, the issuer may use IRS records that report income (e.g., a Form W-2, Form 1099, etc.) for the purchaser for the two most recent years, along with written representation from the purchaser that they have a reasonable expectation that they will meet the income requirement this year as well.
  • If verifying whether a purchaser qualifies on the basis of net worth, the issuer may use bank statements, brokerage statements, other statements of security holdings, certificates of deposit, tax assessments and appraisals provided by independent third parties, provided the records are no more than three months old. The issuer must also use a credit report to assess the purchaser’s liabilities. The issuer must also get written representation from the purchaser that all liabilities necessary to make a net worth determination have been disclosed.
  • The issuer may rely on written confirmation from a third party that the third party has taken reasonable steps to verify the purchaser’s accredited status. The SEC specifically named broker-dealers, CPAs, attorneys, and SEC-registered investment advisers as acceptable third parties, but also stipulated that other third parties could be acceptable provided they take reasonable steps to verify that purchasers are accredited and the issuer has a reasonable basis to rely on that verification.
  • Finally, purchasers who invested in the issuer in a previous 506(b) offering as an accredited investor and remains an investor in the issuer’s 506(c) raise is deemed to satisfy the verification requirements if the issuer obtains certification from the purchaser that they qualify as an accredited investor at the time of sale.

While the SEC provided these four methods as a non-exclusive safe-harbor, the Commission was clear that these methods would not satisfy the verification requirement if the issuer or its agent has knowledge that the purchaser is not an accredited investor. Proponents of Rule 506(c) offerings believe that they will increase transparency, make it easier for small companies to raise capital and decrease companies’ administrative costs. Opponents argue that Regulation D was already a successful capital-raising mechanism (a recent study by the SEC showed a vibrant Regulation D market raising up to a trillion dollars in over 15,000 offerings a year, mostly in offering sizes under $1 million). They also worry that, in the words of Commissioner Aguilar at the meeting at which the new rules were first proposed, removal of the prohibition on general solicitation would be “a boon to boiler room operators, Ponzi schemers, bucket shops, and garden variety fraudsters, by enabling them to cast a wider net, and making securities law enforcement much more difficult.” Rule 506(c) presents opportunities and threats. Contacting a broader range of investors will become easier, and thus more offerings can be made and more investors can enter the market.  This will combine with the opportunities already presented by the internet to present investment opportunities on a more cost-effective basis, without using an extensive (and expensive) PPM. More intermediaries may enter the market.  But as the SEC pointed out in the release proposing the rules: . . . eliminating the prohibition against general solicitation could make it easier for promoters of fraudulent schemes to reach potential investors through public solicitation and other methods not previously allowed. This could result in an increase in the level of due diligence conducted by investors in assessing proposed Rule 506(c) offerings and, in the event of fraud, would likely lead to costly lawsuits . . . This increased awareness of potential fraud may mean that companies need to do more to establish their legitimacy and that intermediaries will seek to provide meaningful due diligence to distinguish themselves from their competitors. Moreover, liability under the securities laws for misstatements, both for issuers and their intermediaries, has not changed. Any person who makes an untrue statement of a material fact, or omits to state a material fact necessary in order to make the statements that are made not misleading, violates the anti-fraud provisions of securities law. This is true whether the statement is intentional or made recklessly. It is easy to imagine how an entrepreneur might make a thoughtless or overoptimistic statement with respect to his or her company in the informal context of social media. Space-constrained media like Twitter will pose particular challenges to presenting a balanced picture of the investment opportunity. Will the rule change mean that we see hedge funds advertising on late-night TV or Twitter campaigns for investments in startups? The impact of the new rule is likely to be more limited in that respect than some have predicted. Public registered mutual funds do advertise, but those advertisements tend to be staid and contain lots of “fine print” disclaimers prescribed by law; private funds will likely be just as constrained. Broker-dealers putting together Regulation D deals are already subject to FINRA rules with respect to their advertising and social media use, and these requirements have not changed. The anti-fraud laws discussed above should have a tempering effect on any overly-exuberant publicity attempts in either paid or social media. And the SEC will be watching. The SEC has established a “Rule 506(c) Work Plan” involving staff from all across the SEC, who will monitor the new Rule 506(c) market for fraud and compliance and to coordinate with state regulators. The effective date for the new rule will be in mid-September, 2013.[2] Rule 506(c) offerings will only be legal after that effective date.  The SEC views “gun-jumping” very harshly. Proposed Changes to Regulation D, Form D and Rule 156 In the interests of investor protection, the SEC proposed the following changes:

  • Requiring the filing of a Form D in Rule 506(c) offerings at least 15 days before the issuer engages in general solicitation (an Advance Form D). Form D is currently filed no more than 15 days after the first sale of securities in a Regulation D offering.
  • Requiring a closing amendment to Form D within 30 days after the termination (final sale or abandonment) of any Rule 506 offering.
  • Expanding the content of Form D to include website address, information about controlling persons of the issuer, the issuer’s type of business, issuer size, whether the filing is an Advance Form D or a closing amendment, securities identifier, information about the type of investor, and use of proceeds. New items would be added to the form to cover number and types of accredited investor, trading venue, whether a broker-dealer filed general solicitation materials with FINRA, identity of investment adviser (for pooled investment vehicles), the types of general solicitation to be used in 506(c) offerings, and the methods to be used for determining accredited status in 506(c) offerings.
  • Requiring written general solicitation material used in Rule 506(c) offerings to include specified legends and other disclosures. Private investment funds would need to use a special legend disclosing that the investors are not provided the protection of the Investment Company Act of 1940. Failure to use the proposed legends would lead to a disqualification from future Rule 506 offerings.
  • On a temporary basis, requiring issuers to submit written general solicitation materials used in Rule 506(c) offerings to the SEC for the SEC to monitor what sort of communications are being used. The SEC will not make a formal review of these materials, and submission is not a condition to the validity of the offering but non-compliance might lead to unavailability of Rule 506 for future offerings. The materials are not formally “filed” with the SEC and will not be available to the public. Submission would be via an “intake page” on the SEC website.
  • Disqualifying an issuer from relying on Rule 506 for one year if it has not complied, within the last five years, with the Form D filing requirements in a Rule 506 offering.
  • Amending Rule 156, which interprets the anti-fraud provisions of the securities laws in connection with sales communications used by investment companies, to apply to private funds and to mandate additional manner and content restrictions on general solicitation materials used by private funds. The SEC states that private funds “should now be considering the principles underlying Rule 156 to avoid making fraudulent statements in their sales literature” and that private funds are just as much subject to the anti-fraud provisions of the law as investment companies are.

Two points that might not be evident to non-securities lawyers:

  • “Written communications” under the securities law include videos, TV appearances, webcasts, website content, Tweets, Facebook posts and recorded songs about the offering. Anything digital or broadcast. (Rule 405 under the Securities Act.)
  • “General solicitation” is very broad concept and includes any attempt to create a market for the securities being offered.

The SEC stated that it needed further consideration following experience with offerings under the new rule before imposing any content restrictions on general solicitation materials, which several commentators had urged the SEC to adopt. The additional filing requirements are not particularly burdensome, and the legending requirements would reflect best practices even if they were not proposed to be compulsory. Likewise, the changes to Rule 156 reflect the SEC’s interpretation of the law as it stands now. The temporary requirement to submit general solicitation materials could fast become unwieldy both for issuers and for the SEC itself. Current practice in online Rule 506 offerings is to use various media in presenting an investment opportunity to investors, including videos, slide decks, graphic-heavy offering memoranda, due diligence reports and other supporting data. These items are prepared in many different formats. Add to these social media postings and other solicitation items (and it is not clear in what format these are to be submitted) and the opportunity for chaos is limitless. Unless the ”intake page” uses a robust document-handling system able to handle many extremely large files in every format in which it is possible to create documents (and the intake page feeds documents to an equally robust database), failed uploads, long loading wait times and garbled data files are inevitable. The intake page is apparently going to be available for voluntary submissions by the time Rule 506(c) is effective. It is quite possible that the SEC’s experience with voluntary submissions will cause it to rethink this proposal. One striking issue in light of the combination of rules that are adopted and rules that are merely proposed is that in September, companies and funds will be able to generally solicit with fewer restrictions, and then additional restrictions (legends, slightly stricter Form D filing requirements and information submission requirements) will kick in after the proposed rule changes are adopted. The SEC also asks whether the definition of accredited investor should be changed when the SEC is permitted to make such changes, which would not be until July 2014. The proposed changes are now open for a period of public comment, which ends in mid-September. “Bad Actor” Rules Adopted The SEC also adopted its final rules disqualifying “felons and other ‘bad actors'” from taking part in securities offerings made in reliance on Rule 506. The new rules were required by the Dodd-Frank Act of 2010, and the SEC first proposed these rules in May 2011. Prior to this rulemaking, Rule 506 did not impose any bad actor disqualification requirements. In contrast, the bad actor disqualification provisions under Rule 262 of the Regulation A exemption from registration has existed for decades. The new rules are based on the established Rule 262 bad actor disqualification provisions, modified to account for the statutory requirements of Section 926 of the Dodd-Frank Act and how the Rule 506 exemption differs from the Regulation A exemption in practice. The SEC’s new rules are set out in new paragraph (d) of Rule 506. The rules state that the Rule 506 exemption — including both “traditional” Rule 506(b) and new Rule 506(c) offerings — will not be available if the “covered persons” in an offering have triggered a disqualifying event. The new rules apply to a range of people (the “covered persons”) in an exempt offering made under Rule 506(b) or 506(c). On the issuer side, the covered persons under the rules include:

  • The issuer itself, its predecessors, and affiliated issuers;
  • Any director, executive officer, or other officer participating in the sale of securities (or the counterparts for such persons if the issuer is a partnership or LLC);
  • Any beneficial owner of twenty percent or more of outstanding voting equity securities; and
  • Any promoter connected to the issuer company at the time of sale.

With regard to intermediaries, the rule applies to:

  • Any investment manager of a pooled investment fund;
  • Any person who has been or will be paid remuneration for solicitation of investors; and
  • Any director and executive officer (along with the partnership and LLC counterparts) of the investment manager or solicitor.

The “disqualifying events” that will prevent a person from being involved in offerings made in reliance on Rule 506(b) or Rule 506(c) include:

  • Any felony or misdemeanor convictions, within the past ten years (five years for the issuer), in connection with the purchase or sale of any security, involving making a false filing with the SEC, or arising out actions as an intermediary, advisor, or solicitor. The felony or misdemeanor convictions must relate to prior involvement with the offer or sale of a security, interactions with the SEC, or conduct as a securities intermediary. The disqualifying convictions do not include all criminal convictions involving fraud or deceit.
  • Any court order, within the past five years,  which, at the time of the sale of securities under Rule 506(b) or Rule 506(c), restrains or enjoins a person from  engaging in practices in connection with a securities transactions, making false filings with the SEC, or acting as an intermediary, advisor, or solicitor. For disqualification under this item, the person must be subject to the court order; that is, specifically named in the order. Other people who may come under the scope of an order, but are not specifically named, will not trigger the disqualification.
  • Any final order of a federal or state financial regulator that, at the time of the sale of securities, bars the person engaging in the business, or associating with an entity, regulated by that regulator. Additionally, the disqualification is triggered by a final order, within the past ten years, based on a violation of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct. The applicable financial regulators include a state securities commission, state banking or thrift regulator, state insurance commission, federal banking regulator, the U.S. Commodity Futures Trading Commission, and the National Credit Union Administration.
  •  Any SEC disciplinary order suspending or limiting the activities of a person at the time of the sale of securities. These could be suspensions or revocations of a person’s registration as a broker, dealer, or investment advisor, or limitation on those activities, or a bar from being associated with the offering of penny stock.
  • Any SEC cease-and-desist order, within the past five years, that at the time of the sale orders a person to cease and desist from committing, or committing in the future, a violation of federal securities laws. These cease-and-desist orders arise out of the commission of securities fraud (i.e., knowingly misrepresenting a fact or omitting a fact necessary to make a previous statement not misleading) or making an unregistered, non-exempt offer of securities in violation of Section 5 of the Securities Act.
  • Any suspension or expulsion from a securities self-regulatory organization for any act or omission to act that constitutes conduct inconsistent with just and equitable principles of trade. Securities self-regulatory organizations include registered national securities exchanges, and national securities associations. The rules do not make clear whether a suspension results in a permanent disqualification or only operates during the period of the suspension.
  • Any order to stop or suspend a registration statement or Regulation A offering statement within the past five years. The disqualification applies to any filer or named underwriter, and extends to parties that are under investigation by the commission at the time of the Rule 506(b) or Rule 506(c) securities offering.
  • Any Postal Service false representation order within the past five years, or temporary restraining order or preliminary injunction at the time of the sale of securities.

A covered person that is subject to a disqualifying event has the ability to petition the SEC and show good cause as to why the disqualification should not apply. The SEC notes specific situations where this may occur, such as a demonstration that a court order was entered without the person having an opportunity to challenge the order. Additionally, the disqualification event will not apply if the relevant court or regulatory authority indicates that the judgment or order should not bar the person from participating in a Rule 506(b) or Rule 506(c) securities offering. The rules also create a reasonable care exception for the issuer.  Under that exception, the issuer may establish that it did not know, and even in the exercise of reasonable care, could not have known that a covered person triggered a disqualifying event. The standard for reasonable care includes the issuer’s factual inquiry into whether any covered person triggers a disqualifying event. The requirements for a factual inquiry vary according to the issuer’s situation. An issuer with only a few executive officers and directors may be expected to have knowledge of its own covered persons.  Factual inquiries on intermediaries may be done by questionnaires, certifications, and background investigations, accompanied by contractual representations and covenants. The factual inquiry should be done at a time that allows the issuer to have a complete and accurate understanding of the absence of disqualifying events at the time of the securities offering.  As such, the inquiry should be done as close to the offering as possible without being unduly burdensome.  Further, ongoing or long-lived offerings may require additional factual inquiries done on a reasonable basis. The rule is designed to phase in after it becomes effective in mid-September, 2013.  Disqualification will only result from disqualifying events that occur after the effective date of the new rules.  Nevertheless, any disqualifying events triggered by an issuer or covered person that occurred prior to the effective date are subject to mandatory disclosure to potential investors.  It is conceivable that failure to disclose a past disqualifying event could result in the finding of securities fraud, which would then trigger the disqualification from reliance on Rule 506(b) or Rule 506(c) in future securities offerings. These new rules impose substantial requirements on issuers and intermediaries relying on the Rule 506(b) or Rule 506(c) exemptions from registration of securities.  Principally, issuers must establish that they have exercised reasonable care to discover whether any of the parties to a securities offering disqualify the issuer from utilizing the exemptions.  If a covered person triggers a disqualifying event, and the issuer fails to exercise reasonable care, that could lead to further securities law violations, triggering additional disqualifying events for the issuer, and thereby severely limiting access to the capital markets. * *** The following table compares the principal attributes of traditional placements under Rule 506, new Rule 506(c) offerings and offerings made under Rule 506(c)’s cousin, crowdfunding.  The SEC has not yet proposed its rules for crowdfunding, so additional restrictions are likely.

 Rule 506(b) offerings (traditional Regulation D)  New Rule 506(c) offerings  Crowdfunding (when legal)
Solicitation: Marketed directly to known investors without “general solicitation”; no internet solicitation Marketed over the internet; TV, advertisements and solicitation on social media permitted Marketed over the internet, but primary solicitation and disclosure happens on “funding portal”; publicity anywhere else (including social media) is restricted
Eligible issuers: Both SEC-registered and private companies can use exemption Both SEC-registered and private companies can use exemption Only companies not registered with the SEC can issue
Eligible investors: Up to 35 non-accredited investors permitted; no limits on accredited investors Only accredited investors may buy No restrictions on type of investors but they must show they understand their investment and are limited in dollar amount
Ascertaining investors’ status: Accredited investors typically self-certify Issuer may use various methods to “verify” accredited status; non-exclusive list of methods that may be relied on as meeting requirements Proposals to come
Offering size: No dollar limit on offering size No dollar limit on offering size $1m limit on offering size; SEC may decide not to include sales to accredited investors in that limit
Disclosure: Private Placement Memorandum typically used although not required if all investors are accreditedFiling Requirements: Form D (very short form with issuer and intermediary identity and offering description but no substantive disclosure) filed after offering starts Disclosure driven by market demands and liability concernsProposals would require earlier filing of Form D and additional amendment after closing; general solicitation materials proposed to be submitted informally to SEC Disclosure (including reviewed or audited financial statements) mandated by statute; additional disclosure likely to be mandatedFiling required with SEC; form to be determined
Liability: Liability under general Rule 10b-5 anti-fraud provisions for any person making untrue statements Liability under general Rule 10b-5 anti-fraud provisions for any person making untrue statements Rule 10b-5 liability plus Section 12(a)(2)-type liability for issuer, its officers and directors and anyone “selling” (including promoting) the offering
Resales: Securities are “restricted”; cannot be freely resold Securities are “restricted”; cannot be freely resold Very limited resales permitted for one year; may be designated “restricted” by SEC
Intermediaries: Intermediaries not required; any intermediaries used must be registered broker-dealers or entities exempt from B/D registration (such as VC Funds) Intermediaries not required; any used must be registered broker-dealers or exempt Intermediaries are compulsory; can be funding portals or broker-dealers

Need help making sure your Broker/Dealer or Crowdfunding Platform is meeting the new Crowdfunding compliance guidelines, contact CrowdCheck at:

# # #

CrowdCheck provides due diligence and disclosure services for online investments, including Regulation D offerings.  We help platforms and issuers ensure that their offering satisfies legal and industry requirements, including the new “Bad Actor” rules and ensuring that issuer statements are accurate and not misleading.  CrowdCheck also provides investors with the tools they need to avoid fraud and make an informed investment decision.  We combine “hands on” and high tech to create a right-sized yet powerful product that works with the reality of small businesses and needs of investors.  For more information please contact us at info@crowdcheck.com or visit us at www.crowdcheck.com.  The above does not necessarily deal with every important topic or cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice.


[1] Accredited investors include, in general, people with a net worth (excluding their residence) of $1 million, income of $200,000 a year (or $300,000 with their spouse), officers and directors of the issuer and various institutions that have more than $5 million in assets. The SEC is considering revising these standards, although it cannot make any revisions until July 2014.
[2] 60 days after publication in the Federal Register, which has not yet occurred.

BancBox Launches First Automatic Escrow Service Aimed At Crowdfunding Platforms

28 Apr

By Mike Butcher

Last June, BancBox, a payment services platform similar to Stripe, debuted its platform allowing developers to build a lot of different payment services. As cofounder Sanj Goyle claimed at the time, “PayPal could be built on top of our platform.” Now it has launched BancBox Crowd, what is — as far as we can tell — the first independent escrow service aimed at crowdfunding portals that operate on equity, debt or revenue share models.

BancBox Launches ‘First’ Automatic Escrow Service Aimed At Crowd Funding Platforms

BancBox Launches ‘First’ Automatic Escrow Service Aimed At Crowdfunding Platforms

The company is also announcing partnerships with crowd investing services 99Funding, SoMoLend and Localstake.

BancBox Crowd claims to be the only solution on the market that provides online investment portals with an automated escrow solution that can replace the manual paper escrow process. They also say it is compliant with FINCEN, FINRA and SEC requirements.

In essence it means being able to create independent escrow accounts for each crowd-backed project, collect funds from those many investors, and either safely return funds if the project doesn’t work out, or disburse those funds when the project, whatever it is, reaches its funding goal.

Goyle says, “We want to have the payment part of the experience of an investor to be a sticky experience so we make it as easy as possible to pay and go through the process.” He says the business model is based on a set transaction fee to the platform partner.

You could say they know about payments. BancBox manages $100 million in consumer deposits daily in nearly 200,000 individual accounts. Its transaction volume has increased 100 percent to nearly $2 billion annually.

Read more…

Uinvest Partners with Investment Banking and Securities Brokerage Firm to Setup Ukraine Crowdfunding Platform

1 Apr

By Robert Hoskins

Uinvest announced a new consulting partnership with the investment banking firm WestPark Capital, Inc. to serve as the crowdfunding platform’s primary U.S.-based investment industry advisor.

Uinvest Partners with Investment Banking and Securities Brokerage Firm to Setup New Crowdfunding Platform

Uinvest Partners with Investment Banking and Securities Brokerage Firm to Setup Ukraine Crowdfunding Platform

“Crowdfunding – is the future of our globalized business world, it’s a logical evolution, and we are happy to find a partner across the ocean who shares these thoughts with us,” said Eugene Rubin, UInvest’s CEO.

According to the letter of intent signed by WPC and UInvest in March 2013, WPC, as a primary U.S. based broker dealer consultant, will help Uinvest on creating a funding portal, as officially recognized by U.S. government – crowdfunding platform. Moreover, WPC has become an advisory partner of our company at UInvest International Conference 2013 that will take place in April 29 – May 1 in Los Angeles, CA.

UInvest is an international investment management company that makes the business cooperation between private investors and small/ medium size businesses easy and efficient. It was founded in 2007 in Ukraine, Eastern Europe. For the past six years, Ulnvest has been connecting private investors with small and medium size businesses and facilitated investment transactions with over a hundred companies resulting in more than $220 million US dollars in successful investments. Ulnvest is also known to be a regional leader in financial planning, investment, and consulting.

Uinvest’s advisory partner, WestPark Capital, Inc. is a full service investment bank, which among other categories is focused on emerging growth sectors such as healthcare, software, technology, biotechnology, financial services, manufacturing, consumer products, media and telecom industries. WestPark provides a comprehensive range of corporate finance services, including initial public offerings, follow-on offerings, private placements and corporate finance advisory services. WestPark is committed to forging lasting partnerships with emerging growth companies and the investors who back them. It is a member of FINRA/SIPC.

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