What “Solicit” Means Under Title III

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

Before the JOBS Act came along, listing a security on a public website would itselfhave been treated as an act of “solicitation.” That’s the odd thing: Title III portals aren’t allowed to “solicit,” yet in the traditional sense of the term that’s the most important thing Congress created them to do.

red-figure_listen-to-me.jpg

 

 

 

 

The fact is that Congress was ambivalent when it created Title III portals. They are allowed to list offerings of securities, but are not allowed to do other things often associated with the sale of securities, including holding investor funds or offering investment advice. They are regulated by the SEC and FINRA, but with a light touch compared with other regulated entities. They are privately-owned, but are required to provide educational materials to investors, police issuers, provide an online communication platform, and ensure that investors don’t exceed their investment limits – in short, they are required to assume a quasi-governmental role.

Title III portals are a new animal, part fish, part bird. Which makes it that much more difficult to decide what “solicit” means when they do it.

Based on the statute, the SEC regulations, the legislative background of the JOBS Act, and the history and overall context of the U.S. securities laws, I think a Title III portal engages in prohibited “solicitation” anytime it tries to steer an investor to a particular security. If it’s not trying to steer an investor to a particular security, then it’s probably okay.

I’ve included some practical guidelines in the chart below. Although there are plenty of gaps, I hope this helps.

Click the following for a print ready version of the complete chart: Rules for Title III Portals

1c53d7e-1-120x120

 

 

 

Mark also maintains a widely-read Crowdfunding blog at crowdfundattny.com. In addition to Flaster/ Greenberg’s Crowdfunding Practice, Mark is also a member of the firm’s Mergers and Acquisitions, Business and Corporate, and Taxation Practice Groups. He represents entrepreneurs and their businesses across a wide range of industries, including technology, real estate and healthcare. Mark holds a Master’s degree in mathematics as well as a J.D. from the University of Virginia. You can reach Mark at 856.661.2265 or mark.roderick@ flastergreenberg.com.

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, : @CrowdfundAttny.

 

 

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 donations ...Daily MailLib Dem MP Nick Cleg is 'crowdfunding' to help bankroll the publication of thousands of party leaflets for canvassing ahead of the re-election bid in Sheffield ...and more » [...]

Android Authority (blog)Crowdfunding project of the week: BIKI is an underwater drone that ...Android Authority (blog)Drones are fun, but they can only move through air. We know plenty of you prefer to go underwater. If so, BIKI is for you.BIKI Robot Fish Paddles Past Crowdfunding Goa [...]

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 |