Watch Out For “Stupid” Investors

There’s been a lot of talk about “curating” issuers on funding portal sites. But what about curating investors? An article in IndieWire suggests that crowd funders should be wary of “stupid” investors. Those are apparently the unsophisticated types who think that they will make a quick buck on their investment and will rattle the cage if it doesn’t happen or doesn’t happen fast enough. Nothing in the statute seems to prohibit an issuer from checking out the investors and making sure that they understand the risks of the investment and will not be “trouble makers” after the offering is complete. Funding portals must know their customers and issuers should know their investors. The disclosure should be clear that issuers can reject any investor that it believes is not “suitable” for the investment. Issuers should work closely with their funding portals to ensure that the investors are right for the investment.

www.indiewire.com/article/5-things-you-need-to-know-about-the-jobs-act-and-equity-crowdfunding?utm_source=feedburner&utm_medium=feed&page=2

Advertisements

About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at: http://www.linkedin.com/pub/jeffrey-a-koeppel/0/63/5a9
This entry was posted in Broker dealers, Congress, Crowd Fund Act, Crowd Fund Act of 2012, Crowd Funding At the Margins, Crowd Funding Platforms, Film, FINRA, Funding Portals, Investments, Legislative Intent, SEC, Small Business, Wall Street and tagged , , , , , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.