Who Is Responsible for Crowdfunding Scams?

Under SEC rules, disclosures to investors must be true and correct, but what about crowdfunding?

The Wall Street Journal points out that some crowdfunding campaigns aren’t quite there yet. For example, Ritot failed to disclose that it was located in the Ukraine and used false names.

This is primarily due to the fact that the portals undertake virtually no due diligence on their issuers. Their terms of service essentially say “caveat emptor” (buyer beware) and they believe that the crowd will smell out the fakers.

The two largest sites don’t offer refunds and require the issuers and their donors to work out any conflict while the sites keep their cut.

You can report crowdfunding scams here: http://kickscammed.com/

http://online.wsj.com/articles/should-crowdfunding-sites-do-more-to-vet-projects-1416942266

 

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 Congress, Crowd Fund Act, Crowd Fund Act of 2012, Crowd Funding At the Margins, Crowd Funding Platforms, Film, FINRA, Funding Portals, Investments, Jobs, Legislative Intent, SEC, Small Business, Venture Capital, Wall Street and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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