Bank Kills Crowdfunding Effort

With the new Securities and Exchange Commission crowdfunding rules just effective, NextRX, a cannabis-related software firm began a fundraising campaign through StartEngine Crowdfunding in Los Angeles.

Two days later, the web portal pulled the plug on the campaign.

The SEC’s rules require that the portal deposit funds in an escrow account until the deal closes. But when Western Alliance Bank, the escrow agent bank, found out that NextRX was involved in the marijuana industry (notwithstanding the fact that it never gets near the stuff as a software company), the bank closed the escrow account and killed the crowdfunding effort.

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 accredited investor, Banking, Banks, Congress, Crowd Fund Act, Crowd Fund Act of 2012, Crowd Funding At the Margins, Crowd Funding Platforms, Department of the Treasury, Dodd Frank, Funding Portals, Investments, Jobs, Legislative Intent, SEC, Small Business, States, technology, VC, Venture Capital, Wall Street and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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