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.
When it Comes to Investment Crowdfunding - Compliance Matters!
What to Know Before You Take the Plunge
The investment crowdfunding marketplace is growing faster than ever before, and is projected to grow by $196.36 billion from 2021 to 2025.
Unfortunately, industry watchers have observed an alarming level of non-compliance with the most basic rules of Regulation Crowdfunding by both companies raising capital and the platforms hosting the campaigns.
Non-compliance can result in regulatory enforcement action and/or investor lawsuits. So if you’re considering dipping a toe into the crowdfunding world, compliance should be at the top of your list.
In 2016, the SEC completed its rulemaking process for Regulation Crowdfunding. It suddenly became possible for a business to list an investment offering on a platform, and anyone in the United States could invest in the offering. But before doing that, the business, as well as the platform, must comply with some basic rules of the road.
According to a recent analysis, only a small minority ...more
