JOBS Act Regulatory Action Update

 

By Scott Andersen, CrowdfundBeat Guest Contributor, Principal at finLawyer.com

During her keynote address at the 47th Annual Securities Regulation Institute on October 28, 2015, SEC Chairman Mary Jo White reminded us that the securities industry is an industry closely monitored by its regulators.  While the speech focused attention on the dramatic changes in capital raising now permissible through the JOBS Act, White made clear that enforcement investigations and actions were a critical part of the SEC’s monitoring of the industry.

jobs-act

 

 

 

 

 

White stated that enforcement investigations were open and focused on the Rule 506 offering space, focusing on discrete areas such as issuers’ failures to take reasonable steps to verify the accredited status of investors (required by Rule 506(c)), sales to unaccredited investors, and unregistered broker-dealer activity, as well as some instances of fraud.

White did not comment on Reg A investigations, as it is still too early to see the enforcement trends in this area, but we can expect a steady stream of investigations as the SEC police’s industry practices.

FINRA has also been active in the JOBS Act space.  It has been actively monitoring funding platforms websites to ensure the content standards of FINRA’s advertising rules are met.  FINRA has directly reached out to a number of its members to raise issues with marketing practices.

Recently, FINRA issued Regulatory Notice 15-32 which highlighted FINRA filing requirements for Reg A offerings.  In the Notice, FINRA emphasized that broker-dealers’ must meet FINRA advertising standards, including that any communication be fair, balanced and not misleading.  FINRA also suggested that it will carefully review Reg A offerings to ensure that FINRA members  comply with suitability standards.

FINRA shortly will assume a more central role in the JOBS Act industry as the primary regulator of broker-dealers and the newly created “funding portals,” which are required to participate in Title III crowdfunding capital raises.

With all the revolutionary changes triggered by the JOBS Act, the recent speech by White reminds us that the securities industry is highly regulated.  Both the SEC and FINRA are already active in this space, and it is only a matter of time before investigations and enforcement proceedings are constant as the industry continues to mature.  While the JOBS Act provides tremendous opportunity for capital raises, proper precautions and care should be employed to ensure that your capital raising under the JOBS Act is in compliance with the law and sufficient to meet the imminent regulatory scrutiny.

 

187d2c8

About Scott Andersen:
Scott is principal at finLawyer.com and General Counsel of FundAmerica. He was most recently the Deputy Regional Chief Counsel at FINRA, and prior to that was the Enforcement Director at FINRA and the NYSE, Co-Chief of the Securities Prosecutions Unit of the NY Attorney General’s office, and Asst. Attorney General for the State of NY. He concentrates his practice on securities and regulatory law.

***

The information and materials in this article are provided for general informational purposes only and are not intended to be legal advice. The issues discussed include complicated areas of law and legal advice should be obtained from a securities attorney about your specific circumstances.

 

 

 

Tags: , , , , , , , , , , ,

HEADLINE NEWS

ForbesTitle III Crowdfunding For Real, Part IIForbesTitle III of the JOBS Act went into effect last year, and many entrepreneurs and small businesses are curious about if it works and how. I had the pleasure of interviewing several companies that have gone through “equity crowdfunding [...]

EntrepreneurThis Crowdfunding Category Will Blow Up in 2017, Says the CEO of ...EntrepreneurDavid Mandelbrot believes these kinds of products will be big on the crowdfunding platform this year. He also shares his tips for successful fundraising.and more » [...]

The AdvocateCan Equity Crowdfunding Be Fixed?The AdvocateWith the adoption last year of the Regulation Crowdfunding (Reg CF) exemptions by the Securities and Exchange Commissionprivate companies can now raise capital from all 230 million American adults. Until now, businesses have bee [...]

Funerals paid for by crowdfunding are on the riseBBC NewsCharles Wells, chief operations officer for JustGiving, said: "Thinking about the costs of a funeral is the last thing a grieving family wants to do but with the cost of funerals rising JustGiving has seen increasing number [...]

Phys.OrgCrowdfunding expands innovation financing to underserved regionsPhys.OrgThe study found that crowdfunding in a region, and in particular successful technology campaigns, appeared to cause an increase in venture capital funding in the region. This occurs as venture capitalists [...]

Crowdfund InsiderBeatStars & Play Impossible Set to Close Successful Equity Crowdfunding Campaigns on IndiegogoCrowdfund Insiderindiegogo-equity-crowdfunding BeatStars and Play Impossible are set to close their crowdfunding campaigns through Indiegogo and MicroVentures' equit [...]

Telegraph.co.ukWellesley to freeze crowdfunding campaign as it courts City investorsTelegraph.co.ukPeer-to-peer property lender Wellesley is suspending its crowd-funding efforts as it courts City investors to help fund its expansion. Wellesley is set to pause its campaign that asked s [...]

Business Insider UKLondon startup Pact Coffee moved out of its office after failing to raise a £1 million crowdfunding roundBusiness Insider UKPact Coffee's move comes after the startup failed to hit a £1 million crowdfunding target last March. The Crowdcube campaign was terminat [...]

SBC NewsPeople Power – Crowdfunding in igamingSBC NewsWhen asked what advice he'd give a company considering going down this route, Rose told SBC: “A company looking to launch should firstly make sure crowdfunding is really the best option for them. Do you really need to raise mo [...]

BCN Biotech Aromics Nears 100K€ Crowdfunding on Capital CellCrowdfund InsiderSince launching its crowdfunding campaign on Capital Cell, Aromics has raised just over 95,020€ toward its 300,000€ goal for 6.19% equity offered. Cofounded by CEO Dr. Carme Plasencia, CFO and Chairman of the [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |