Crowdfunding Needs More Regulation(?)

A recent scholarly study noted that Regulation Crowd Funding is not sufficiently protective of the typical investor.

The study notes that, notwithstanding the disclosure requirements, unsophisticated investors could easily be sucked into a “get rich quick” Ponzi scheme or outright scam.

The required “all or none” rule can be circumvented by using (illegally) several portals with lower minimum thresholds.

And there is no standard due diligence process among the various licensed web portals to weed out the fraudsters.

If enough crowdfunding schemes turn out to be fake, then investors will believe that they all are and lessen access to capital by real companies.

https://www.wsj.com/articles/the-unseen-perils-of-crowdfunding-for-investors-1511751600

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, balance, Broker dealers, checkbook, 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, Wall Street and tagged , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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