Crowdfunding Causes SEC Deja Vu

One of the reasons that the SEC doesn’t like crowdfunding is because the sale of small company shares is just an extension (in its institutional instinctual memory) of the old penny stock – boiler room business.

As a reminder of the bad old “pump and dump” days made famous in “The Wolf of Wall Street,” the SEC yesterday charged four promoters for manipulating the securities of several microcap companies, including marijuana-related stocks.

With its new Microcap Fraud Task Force, the SEC filed complaints in federal court alleging that these guys bought shares of Hemp, Inc. and other pot-related companies, touted the companies on the internet and social media with false information and then quickly sold the stock as the prices rose. Everything old is new again.

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:
This entry was posted in Broker dealers, Congress, Crowd Fund Act, Crowd Fund Act of 2012, Crowd Funding At the Margins, Crowd Funding Platforms, FINRA, Funding Portals, Investments, Jobs, Legislative Intent, SEC, Small Business, Wall Street and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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