Why Do We Need Regulation Crowdfunding?

ICYMI (In Case You Missed It): In a recent opinion of the Securities and Exchange Commission, the SEC reiterated that:

“Section 5(a) of the Securities Act prohibits the sale of any security, in interstate commerce, “unless a registration statement is in effect. Section 5(c) similarly prohibits the “offer to sell” any security, in interstate commerce, “unless a registration statement has been filed as to such security.”

“Section 5 imposes strict liability on sellers engaged in unregistered transactions, 17 and the Division is not required to show scienter .”(Scienter means bad intent).

So, any sale of a security must be registered unless an exemption from registration can be found.

“It is well-established that exemptions from the general policy of the Securities Act requiring registration are strictly construed against the claimant of such an exemption and the burden of proof is on the claimant.”

Regulation Crowdfunding is that exemption as long as it’s requirements are followed.

https://www.sec.gov/litigation/opinions/2016/33-10077.pdf

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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 accredited investor, Broker dealers, Crowd Fund Act, Crowd Fund Act of 2012, Crowd Funding At the Margins, Crowd Funding Platforms, fraud, Funding Portals, Investments, Jobs, Legislative Intent, review, SEC, Small Business, technology, VC, Venture Capital and tagged , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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