Crowdfunding Update! Using Title III Disclosures In Title II

By Mark Roderick , CrowdFund Beat   Sr. Guest  Contributor, @CrowdfundAttny.

 

Microsoft-Update

 

 

 

 

 

Title III requires all these disclosures, reported on the new Form C:

The name, legal status, physical address, and website of the issuer
The names of the directors and officers of the issuer and their employment history over the last three years
The name of each person owning 20% or more of the issuer’s stock
The issuer’s business and business plans
The number of employees of the issuer
A statement of risks
How much money the issuer is trying to raise
How the money will be used
The price of the shares or the method for determining the price
The capital structure of the issuer, including the rights of all security-holders, restrictions on transfer, and how the securities are being valued
A description of the portal’s financial interests
A description of the issuer’s liabilities
A description of other offerings conducted within the past three years
A description of “insider” transactions
A discussion of the issuer’s financial condition
Financial statements or their equivalent
Any other information necessary in order to make the statements made not misleading
As I write this, a lot of very smart entrepreneurs and software engineers are working to automate these disclosures. They have to: to make money running a Title III portals, you’re going to have to automate everything that can be automated.

Now look at Title II. As a write this, the disclosures for almost all Title II deals are prepared the old-fashioned way, with a lawyer writing an old-fashioned Private Placement Memorandum. The PPM for Deal 1 on Portal X might or might not include the same information as the PPM for Deal 2 on Portal X, and almost certainly doesn’t include the same information or look the same as the PPM for deals on Portal Y. An investor trying to compare apples to apples would go, well, bananas.

That situation is ripe (sorry) for change and I think it will change as Title III comes online, for three reasons:

As someone argued recently, investors couldn’t care less about the distinction between Title II and Title III. They are going to want to see the same information in the same format.
Using the tools developed for Title III, Title II portals will be able to provide more information than they are currently providing, cheaper and more effectively.
There is no law that dictates what information must be provided in a Title II offering. But we still think about 17 CFR §240.10b-5, which makes it unlawful to “. . . .make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made. . . .not misleading. . . .” As the industry develops, it seems at least possible, if not likely, that the disclosures required by Title III could be viewed as the standard for avoiding Rule 10b-5 liability.
Questions? Let me know.

For more information on Crowdfunding, including news, updates and links to important information pertaining to the JOBS Act and how Crowdfunding may affect your business, follow my blog, or twitter handle: @CrowdfundAttny.

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

HEADLINE NEWS

Daily MailNick Clegg crowdfunding former Deputy PM appeals donationsDaily MailOn his website, there is a section which appeals for 'crowdfunding' to help bankroll the publication of thousands of Lib Dem leaflets. He's appealing for £25 donations. Yet Clegg, who has take [...]

Android Authority (blog)Crowdfunding project of the week: BIKI is an underwater drone that looks like a fishAndroid Authority (blog)We are back with another 'Crowdfunding project of the week', where we highlight some of the hottest tech coming from websites like Kickstarter [...]

Hall alone in vote against rape kit crowdfundingRockwall County Herald Banner“Rape kit testing is far too important to rely on an undependable funding source like crowdfunding. This is a core function of government and as such it should be funded by government. Victims deserve to know [...]

Virginia Tech launches its own crowdfunding site to reach new generation of donorsRoanoke TimesOne of the first four pilot projects that went live on Jump, Tech's crowdfunding website, lets users pay for as little as one local child to attend educational programming by the Moss A [...]

New York MagazineFacebook Rolls Out Crowdfunding to EveryoneNew York MagazineDepending on your perspective, the rise in popularity of crowdfunding is either a fantastic new way that the internet lets strangers help each other out, or emblematic of the decay of institutional safeguards [...]

Youris.comCrowdfunding boosts green powerYouris.comWith state subsidies falling, crowdfunding platforms are increasingly stepping in to help make green power projects a reality. For individual investors, injecting anything from a few euros to hundreds of thousands, they are a tangiabl [...]

Tech City NewsWhy are more and more tech firms turning to crowdfunding?Tech City NewsWhen Facebook bought virtual reality firm Oculus VR for £2bn (£1.3m) in 2014, the crowdfunding world looked on with amazement. Oculus, founded in California in 2012, had raised its crucial first $2m o [...]

Crowdfund InsiderResearch on Risk Shows Crowdfunding Has Significant Fraud Immunity: Here's WhyCrowdfund InsiderIt may be counterintuitive but the research has been done and the results are now in – and it's as we've been saying for almost five years. Fraud in crowdfund [...]

Finance MagnatesEthereum Alternative Æternity Starts Phase Two of Crowdfunding CampaignFinance MagnatesÆternity's blockchain is built from scratch with most of the transactions done off-chain for speed and efficiency. Avi Mizrahi | News (CryptoCurrency) | Monday, 29/05/2017|14:55 [...]

Devon LiveCrowdfunding page set up for family of boy who died after drug use ...Devon LiveA fundraising page has been set up in memory of a 15-year-old boy who died on Friday night after taking a recreational drug at a youth disco. Yesterday Devon ...and more » [...]

CFB Finance

Marketwired

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

Press Release

CrowdFund Beat Media

Teacher turns to crowdfunding to buy greenhouse for Nunavut students upflow.co/l/bqoI pic.twitter.com/chHa3MnCfT

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 |