Securities Lawyer Explains Why Violating Crowdfunding Regulations Isn't Like Speeding
CrowdCheck CEO Sara Hanks Helps Clients Avoid Problems
CrowdCheck CEO Sara Hanks says securities law enforcement differs dramatically from traffic enforcement. If you speed and don’t get caught in the act, you don’t worry about later being investigated for a traffic violation. Sara says that’s not how it works for securities:
We often have the mom conversation. “Well, if everybody jumped off the Brooklyn Bridge, would you do it?”
Part of the problem here is understanding that it takes the SEC [Securities and Exchange Commission] about two years to think about, well, maybe they really shouldn't have done that. And another year to issue the subpoena and another year to capture the information.
We've got people who are receiving subpoenas for stuff they did in 2017. I mean, the SEC is out there. Just because somebody did something recently doesn't mean, A, that they're going to get away with it and B, that you're going to get away with it if you copy them.
CrowdCheck’s Analysis of the New Exempt Offerings Rules: Testing the Waters comes to Reg CF
CrowdCheck, Inc.
While the costs of preparing an offering under Reg CF are significantly lower than other types of securities offerings, they can still be expensive in terms of professional and marketing fees prior to having any sense of whether the offering will be successful. The SEC heard the complaints from issuers on this point and have adopted a testing the waters provision that is substantially similar to that used in Reg A.
Under new Rule 206, issuers contemplating an offering under Reg CF may make written or oral offers to test the waters (“TTW”) prior to filing a Form C. Once the Form C is filed, the offering is live and no more TTW can be done. There is no restriction on the content of TTW communications, as there are for solicitations after the Form C has been filed under Rule 204(b), however, any TTW must include a legend containing the following:
(1) That no money or other consideration is being solicited, and if sent in response, will not be accepted;
(2) That no offer to buy the securit...more
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