Jobs Act 101How Can I Raise Capital After the JOBS Act?
A private or public company can raise capital in a variety of ways.
Traditional sources of capital for companies include loans from financial institutions such as a bank, or from friends and family as well as receivable financing. Read More
What Is Accredited Crowdfunding? – Go Public Lawyer
As of September 23, 2013, the JOBS Act has permitted general solicitation and advertising in Rule 506 private placements. While equity crowdfunding is not yet legal, both the SEC and FINRA have proposed rules for equity crowdfunding. This has caused confusion about the difference between equity crowdfunding and accredited crowdfunding pursuant to Rule 506(c) offerings particularly in going public transactions.
Rule 506 is a commonly used exemption in going public transactions where a resale registration statements on Form S-1 is used. While the public, and perhaps even some companies, may think of advertising and crowdfunding as the same thing, they are not. Crowdfunding is generally defined as raising small amounts of money from many people, rather than large amounts from a few. In recent years, it’s often been used to provide funding for disaster relief, political campaigns, and other “causes” of interest to many people. Read More
Crowdfunding a Going Public Offering
The Securities and Exchange Commission (“SEC”) rules for crowdfunding remain unresolved, but 13 states have passed legislation allowing intrastate crowdfunding. The SEC as well as state securities regulators have provided meaningful guidance addressing intrastate crowdfunding. Read More
And The Beat Goes On – Tennessee Adopts Crowdfunding
While the SEC (after 700 days) has not adopted its final equity crowdfunding regulations, Tennessee’s entrepreneurial efforts have moved forward. Tennessee’s new crowdfunding law known as “Invest Tennessee Exemption” became effective on January 1, 2015. The new law allows Tennessee-based companies to engage in intrastate crowdfunding. The Invest Tennessee Exemption requires that the offering comply with the federal intrastate offering exemption provided by Section 3(a)(11) of the Securities Act of 1933, as amended. Read More
Due Diligence in Accredited Crowdfunding Offerings
The Anti-Fraud Provisions That Apply to Accredited Crowdfunding
Even though Accredited Crowdfunding Offerings are exempt under Rule 506(c) and no specific disclosure requirements apply, under most circumstances, the anti-fraud provisions mandate disclosure of certain information to investors. Section 10(b) of the Securities Exchange Act of 1934, (the “Exchange Act”) prohibits the use of any manipulative or deceptive device in contravention of the Securities & Exchange Commission’s rules and regulations. Rule 10b-5, was adopted pursuant to Section 10(b), and prohibits fraudulent devices and schemes, material misstatements and omissions of any material facts, and acts and practices that operate as a fraud or deceit on any person in connection with the purchase or sale of a security. Read More