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A New Crowdfunding Watchdog In Massachusetts Brenda Hamilton
Submitted 2014-01-05 18:24:36 Consumer watchdogs and the Securities and Exchange Commission (“SEC”) as well are aware that certain provisions of the new Rule 506 created in connection with the JOBS Act could encourage fraud if not effectively policed Wholesale Jerseys Free Shipping , resulting in significant losses for non-accredited investors who choose to participate in 506 offerings.
These provisions include those making advertising and general solicitation permissible, and those allowing “crowdfunding” initiatives.
Crowdfunding is a relatively new word used to describe fundraising efforts to which large numbers of people contribute relatively small sums of money. It’s been successful in filling the coffers for disaster relief organizations and political campaigns, but until the JOBS Act was signed into law, public startup companies have been forbidden to use it. The SEC has yet to complete its crowdfunding rules, but that’s likely to be accomplished in the near future.
On July 10, 2013 Wholesale Jerseys Cheap , the SEC completed its rules allowing general solicitation and advertising in Rule 506 securities offerings. These changes become effective in September.
Galvin’s I-Crowd
All this has some state securities regulators planning ahead. Recently, Massachusetts Secretary of State William F. Galvin announced the formation of the Internet Crowdfunding and Offerings Watch Department, or “I-Crowd” for short. Its brief will be to track how issuers use general solicitation to market offerings, and monitor equity crowdfunding portals raising money in the Bay State. The new unit will be staffed by securities attorneys and IT personnel.
Its duties will include:
• Gathering data about the types and quantity of public advertising used for unregistered offerings;
• Tracking how issuers use the new rules that allow general solicitation and advertising of non-public offerings;
• Monitoring portals raising money in the Commonwealth;
• Collecting data about the types of offerings presented under the new rules;
• Compiling information on how issuers verify whether investors are qualified to purchase such offerings and evaluating those procedures;
• Detecting fraudulent offerings early, in order to protect investors; and
• Referring cases for enforcement action when potential fraud is detected.
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