Opinion

Improving Legal Documents in Crowdfunding: New Tax Audit Language for Operation Agreements

By Mark Roderick CrowdFunding Beat  Sr. contributing editor and crowdfunding attorney with Flaster/Greenberg PC. Last year I reported that Congress had changed the rules governing tax audits of limited liability companies and other entities that are treated as partnerships for tax purposes. The changes don’t become effective until tax years beginning on or after January 1, 2018, but because most LLCs created today will still be around in 2018, it’s a good idea to anticipate the changes in your Operating Agreements today. Under the current rules, the IRS conducts audits of LLCs at the entity level through a “tax matters partner” (normally the Manager of the LLC), and…

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Worried About Fraud with your Self Directed IRA? SEC says, Ask a Financial Advisor

By Kirk Chisholm Wealth Manager and Principal at Innovative Advisory Group (IAG), CrowdFund Beat Guest post, If you are worried about the risks of fraud when using a self-directed IRA, then do as the SEC recommends in their Fraud Alert, “Ask a professional”. In their September 2011 Investor Alert, Self-Directed IRAs and the risk of fraud , the SEC outlined typical fraud risks when using a self-directed IRA. The top three self directed IRA fraud risks that they focus on are: Misrepresentations regarding custodial responsibilities Exploitation of tax-deferred account characteristics Lack of information for alternative investments While these may be common fraud risks that the SEC sees…

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Regulation A Timeline

By Mark Roderick CrowdFunding Beat  Sr. contributing editor and crowdfunding attorney with Flaster/Greenberg PC. “How long will it take?” That’s one of the two questions I’m asked most often about Regulation A. The answer is that if everything goes smoothly, it should take about 20 – 24 weeks from the day an issuer decides to raise money using Regulation A until it begins selling securities. Every company is different, of course, and lots of things can delay the process, but 20 – 24 weeks is a good rule of thumb. With this Regulation A Timeline, I hope to provide issuers and their advisors with a framework for conducting…

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Intermediaries, Trust and Equity Crowdfunding

By Paul Niederer CrowdFundBeat Sr. Contributing Editor Intermediary-controlled trust has been the main game in selling shares and equity since the 1930’s. That is why regulators have latched onto intermediaries, and their existing regimes to regulate the emergence of crowdfunding. However intermediary-less trust is on its way. A truism that is getting stronger and stronger is that “the crowd will catch a bad actor long before the regulator will”. The persistent focus on intermediaries by regulators means that they have not empowered the assistance the crowd can give in keeping equity crowdfunding participants honest. If blockchains become the new way to evidence trusted equity crowdfunding transactions we…

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Crowdfunding Aggregators Help Investors Gain Efficiency, Convenience

By Jorge Newbery,  CrowdFundBeat contributing Guest Editor,  Founder and Chief Executive Officer of American Homeowner Preservation LLC Crowdfunding is predicted to account for more funding than venture capital in 2016. This relatively new tool is rapidly emerging as a powerful capital-raising option for startups, small businesses, and real estate operators. Equity crowdfunding, or investment crowdfunding, empowers investors to fund ventures in return for equity or debt. But with countless deals available on a wide range of online platforms, would-be investors may not know where to look for deals, or may feel overwhelmed by the abundance of choices. In order to help potential investors navigate this sea…

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Understanding Reg CF: Discussing financial results

Understanding Reg CF: Discussing financial results

By Sara Hanks , CrowdFundBeat  Sr.contributing Guest Editor  CEO/Founder, CrowdCheck, Inc. As we have previously discussed, the Regulation CF disclosure requirement for thefinancial condition of the issuer has the potential to get inexperienced companies in trouble. It is in this section of the disclosure that optimistic entrepreneurs may provide misleading information by not providing the full details of performance measurements, or by not including information on the assumptions underlying any financial projections. Such statements may be misleading in their own right, or may omit information necessary to make the provided information not misleading – also known as securities fraud(link is external) (see paragraph (c)). As we have…

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Death to the Accredited Investor Rules

By Jorge Newbery,  CrowdFundBeat contributing Guest Editor,  Founder and Chief Executive Officer of American Homeowner Preservation LLC The American Dream is dying. Social mobility in America has all but perished for the majority of Americans. With an extraordinary concentration of wealth amongst the richest, working-class Americans are often shut out of opportunities that could allow them to rise. Investments enable citizens to bolster their incomes and plan their financial futures. But, while rules and regulations prohibit most Americans from participating in higher yielding ventures, our society’s wealth gap will continue to widen. The inequality of investment possibilities can be largely attributed to the Security and Exchange…

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“REG CF” An Analysis of the First 50 Crowdfunding Offerings

By Marc A. Leaf, Robert T. Esposito, and Abigail Luhn, The Securities and Exchange Commission (SEC) is now accepting Form C filings from private companies seeking to sell securities through registered crowdfunding portals. We have been following the nascent crowdfunding space closely and will continue to monitor the adoption of crowdfunding as a new method of financing private companies. In this alert, we will analyze offerings conducted through crowdfunding portals, offer tips for those thinking of entering the space, and provide a summary of the SEC’s final rules and forms for equity crowdfunding (“Regulation Crowdfunding”). The Drinker Biddle Crowdfunding Report, an open data set providing…

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A Reflection of Online Money Lending

By Steve Cinelli , CrowdFund Beat Sr. Editor, @stevecinelli Some many months back, in fact prior to their listings, I wrote a piece questioning the lofty valuations of the marketplace lending platforms (LC and ONDK) as they entered the public markets.  The basic thesis was recognizing the fundamental business these platforms engaged, i.e., money lending, and how others in the same space, albeit not as “technology positioned”, delivered the same product and/or service, and I thus intimated that the newbies should be valued with similar metrics to the incumbent financial institutions. In observing the platforms’ performances over the last year, as well as evolving market conditions,…

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Unregistered broker-dealer services can be illegal…and costly.

By Tim Boykin Corporate Counsel at WealthForge, Crowdfund Beat Guest Contributor, Last month, in our blog post “Unregistered? You might be breaking the law… and the SEC is watching.,” we discussed the importance of the registration requirement of Section 15(a)(1) of the ’34 Act. We suggested that Section 15(a)(1) requires registration as a broker-dealer when a person effects or induces the purchase or sale of securities. Recent SEC action suggests that the SEC is construing the registration requirement broadly and is bringing related enforcement actions. The previous post discussed a specific SEC enforcement action involving an unregistered online platform. This post dives a bit deeper into the…

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Is Real Estate Crowdfunding Offers An Attractive Alternative For Secure Investments?

By Yemani Mason Founder at VestMunity.com, Crowdfund Beat Guest post, Over the past several years, home prices have been on the rise – particularly in South Florida. According to the Sun-Sentinel, “In South Florida, median home prices have been on the upswing in recent years and rose modestly in April.” Additionally, more and more people are moving to Miami, adding to an already active real estate market.Realestatearama reports that, “South Florida’s tax environment (no state income tax in Florida), growing tech industry and infrastructure improvements are leading more Americans to relocate to Miami…The trend of Americans moving to Miami is going to continue.” Still, many people may…

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Regulation Crowdfunding is a Different Ball Game

By Brian Bourgerie Crowdfunding Strategy, Personal Cloud Technology, CrowdFund Beat Guest post, For the last six months or so I have been working with both portal owners and offering issuers to prepare for Regulation Crowdfunding (Title III). Having been in the trenches on multiple sides I have been able to observe some of the shortcomings and successes of the new crowdfunding law and those taking advantage of it. I want to focus on one area of observation (and frustration) we have come across. Just because you were successful with Reg D or even Reg A+ doesn’t mean you know what you’re doing with Reg CF. Similarly, having…

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HEADLINE NEWS

The VergeDonald Trump's terrible crowdfunding site was a microcosm of his political careerThe VergeAnd from the beginning, the site had Trump's populist edge. Zanker boasted that “the reign of Kickstarter's Brooklyn hipsters is over,” referring to Kickstarter's New [...]

Social media, crowdfunding skirmishes encapsulate Endy debateThe Herald JournalAfter that, a campaign with the same goals and the same organizer appeared on a separate crowdfunding site, FundRazr.com. This campaign also drew negative attention on social media, and after a few hours th [...]

FortuneCrowdfunding: Women Better at Raising Money Than Men Are ...FortuneA new study has found that women are generally better than men at crowdfunding.Women are better at crowdfunding than men, shows study | The ...The Independentall 3 news articles » [...]

Wired.co.ukAfter budget cuts, Museums are crowdfunding to preserve historyWired.co.ukIn 2015, the Smithsonian National Air and Space Museum in Washington, D.C. launched its very first crowdfunding campaign to 'Reboot the Suit'. The idea was to raise much-need funds to conser [...]

ForbesWhy Crowdfunding Is Still Booming, Especially For Chinese Tech CompaniesForbesBased on recent media reports, it looks like crowdfunding is now in the "disillusionment" phase of the famous Gartner hype cycle, after peaking a few years back. I will argue that crowdfundin [...]

Yahoo SportsCan crowdfunding save women's college hockey? - Yahoo SportsYahoo SportsNorth Dakota cut its women's hockey program in March, in one of the saddest and most stunning decisions to rock the sport at the collegiate level. “When you ...Gophers women's hockey con [...]

Business Daily (press release) (blog)How Women Trounce Men When Raising Seed Crowdfunding CapitalForbesMale entrepreneurs may account for the majority of business owners raising finance on crowdfunding platforms in the UK, but their female counterparts are far more likely to get the s [...]

TwinCities.com-Pioneer PressWCHA announces crowd-funding campaign to bolster women's hockeyTwinCities.com-Pioneer PressThat mindset led the WCHA to announce a crowdfunding campaign on Thursday to help fund the league's expenses and lessen the financial burden of the seven re [...]

Gamasutra (blog)Gamasutra: Anti Danilevski's Blog - The problems of crowdfunding ...Gamasutra (blog)The Art & Business of Making Games. Video game industry news, developer blogs, and features delivered daily.and more » [...]

YourStory.comA crowdfunding portal ensuring total authenticity of cases, MeHelp lets you donate confidentlyYourStory.comIn March this year, Samiya Hafeez, a 22-year-old woman from Hyderabad, was arrested for running a fake crowdfunding campaign through which she collected almost Rs 22 [...]

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