What Do Intrastate Crowdfunding and Peep Shows Have in Common?

BY BENJI JONES, appeared in ExitEvent,

This phrase has stayed with me since first semester of Con Law—the classic expression of subjectivity. U.S. Supreme Court JusticePotter Stewart refused to identify a set of rules or a test that would define materials as “obscene” under the First Amendment; instead, he simply explained that when it comes to “hard core” pornography—“I know it when I see it.”(Jacobellis v. Ohio, 378 U.S. 184 (1964)).

As a corporate lawyer, I hate subjective standards. Give me a yes or no answer, a bright-line test, a set of rules to follow—anything to help me advise my client on how to get the deal done with as little risk as possible. Unfortunately, despite all of the statutes written by Congress and the rules and regulations promulgated by the Securities and Exchange Commission (SEC), it is almost impossible to avoid subjective standards in the world of securities regulation. Instead of Justice Stewart’s words, however, we get the all-encompassing “facts and circumstances” test.

For instance, the Division of Corporation Finance of the SEC recently published three Compliance and Disclosure Interpretations (or C&DIs) on how companies can use the Internet to conduct “intrastate offerings” under Rule 147, the “safe harbor” for offerings made pursuant toSection 3(a)(11) of the Securities Act of 1933, as amended. The C&DIs reiterated prior guidance that Rule 147 does not prohibit general advertising or general solicitation, but cautioned that offers made in reliance on the intrastate offering exemption and Rule 147 must be made only to persons resident in the state or territory of which the issuer is a resident. The guidance also noted that an issuer could use a third-party internet portal to promote intrastate offerings and went on to identify specific measures the intermediary should implement to ensure the offers are limited to the residents of a particular state or territory. (Yes! I love a checklist to follow.)

But when it comes to the question of whether a company can use its existing website or social media presence to solicit investors in an intrastate offering, the SEC goes all “Justice Stewart” on us. Due to the broad and indiscriminate manner in which issuers typically use their existing websites and social media presence, the C&DI states:

Although whether a particular communication is an “offer” of securities will depend on all of the facts and circumstances, using such established Internet presence to convey information about specific investment opportunities would likely involve offers to residents outside the particular state in which the issuer did business.

Read more: This post originally appeared in ExitEvent”.

http://exitevent.com/index.asp

HEADLINE NEWS

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news [...]

ForbesCrowdfunding Do's And Dont's From iFundWomen's Karen CahnForbesDuring our conversation, she was transparent in sharing that her first software company, VProud, failed because she “did everything backwards” and spent too much time trying to perfect the product. “Pe [...]

Crowdfunding For French CastlesNPRYou too can own a French chateau, in part, anyway. Romain Delaume, CEO of Dartagnans, tells NPR's Scott Simon about a crowdfunding effort underway to preserve La Mothe-Chandeniers. SCOTT SIMON, HOST: What if I told you that for about $60, you cou [...]

VentureBeat10 reasons the $1 million crowdfunding cap should be $20 millionVentureBeatIt's been18 months since the final rule of the JOBS Act went into effect, allowing equity crowdfunding. In those 18 months, everything proponents of the rule said would happen (and none of what [...]

The IndependentFrench Chateau bought by 10000 people through crowdfunding schemeThe IndependentIn countries where castles aren't snapped up by The National Trust and immediately furnished with a tearoom and gift shop, other ways must be found to preserve historical buildings. The [...]

Crowdfunding sites help Boulder County residents raise money to pay for treatmentsBoulder Daily CameraHer health insurance, once she reached the $2,000 deductible, covered most of the chemotherapy, but she has been receiving extra treatment at the Helios clinic in Boulder and is parti [...]

CurbedReal estate crowdfunding expands into more niche marketsCurbedTo those unfamiliar with real estate crowdfunding, the Fair-Haired Dumbbell development in Portland may be just the kind of wacky, esoteric project one envisions when imagining what happens when strangers pool funds o [...]

CGTN America (blog)Crowdfunding movement makes its way through MexicoCGTN America (blog)Crowdfunding movement makes its way through Mexico. Americas Now. Click to share on Facebook (Opens in new window) · Click to share on Twitter (Opens in new window) · Click to share on Google+ (Ope [...]

WKRN.comFranklin mother, son warn of crowdfunding dangers after scamWKRN.comFRANKLIN, Tenn. (WKRN) – Thousands of dollars raised through crowdfunding lost, as a family seeks possible legal action against one of their own. Now a Franklin mother warns others of the dangers of crowdfundi [...]

MashableLearn how to get your big idea off the ground with crowdfundingMashableJust to let you know, if you buy something featured here, Mashable might earn an affiliate commission. Instead of fielding requests from your friends to donate to their Kickstarter or Indiegogo campaigns, w [...]

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 |