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Real Estate Crowdfunding

Real estate investing has a long history of crowdfunding. Prior to the 1986 changes to the tax code, there was a large syndication business for getting investors into real estate. Although the investment was usually more for the tax breaks involved instead of income and capital appreciation. With the surge of product crowdfunding through sites […]

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Pay to Pour

Massachusetts regulators have launched an investigation into whether providers are paying for access. In this case, it’s about beer, not political donations. Pay-to-play is illegal under Massachusetts and federal liquor control laws. The restrictions date back to the end of Prohibition, to keep large breweries from dominating the market. Small breweries have to compete for […]

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The SEC Shuts Down Another Illegal Crowdfunding Site

Kickstarter has shown the world that crowdfunding is a viable option for funding great ideas. Because of US securities laws, the funding arrangement on that platform cannot be for an equity interest. That’s selling securities and that practice is subject to decades of protections built to protect consumers.  The JOBS Act opened the possibility of […]

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The SEC Still Hates Intrastate Crowdfunding

One of the exemptions from registering a securities offering is if the offering is limited to one state. Some crowdfunding advocates latched onto this exemption and have been pushing for single state crowdfunding at the state legislatures. On April 10, 2014, the SEC issued a Compliance and Disclosure Interpretation on intrastate crowdfunding offerings. The interpretation was […]

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Narrowing the Safe Harbors

The Securities and Exchange Commission rolled out the accredited investor verification requirement and made it principle-based for purposes of Rule 506(c). You have to take reasonable steps to verify that an investor meets the accredited investor standard. In the same release it created four non-exclusive safe harbors that would deemed to be taking “reasonable steps.”  The […]

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Don’t Lie About Being GIPS Compliant

The Global Investment Performance Standards (GIPS) attempts to be a set of standardized, industry-wide principles that guide investment firms on how to calculate and present their investment results to prospective clients. An SEC-registered investment adviser touting that it is GIPS Compliant in advertising, moves GIPS from an accounting concern to a regulatory concern. ZPR Investment […]

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International Regulatory Landscape For Private Funds

These are my live notes from PEI’s Private Fund Compliance Forum. They are likely to be incoherent and full of typos. AIFMD is a difficult topic. Transitional regime. It’s just about over; it expires at the end of July 2014. They don’t work in France. They work well in the UK. Germany is in the […]

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Congress Tries to Fix the JOBS Act

I’m still surprised that the Jumpstart Our Business Startups Act flew through Congress two years ago. It’s surprising to see bi-partisan support for anything. Unfortunately, the law was flawed and has accomplished little that it set out to accomplish. The Title III Crowdfunding law was wildly hailed as monumentally changing the way small businesses could […]

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Accredited Investor Verification

When Congress imposed a lifting of the ban on advertisements for private placements, it also imposed a mandate that the fundraiser “take reasonable steps to verify that purchasers of the securities are accredited investors.” The methods for verification were to be determined by the Securities and Exchange Commission. The SEC, to its credit, did not […]

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Filing Form D and General Solicitation

One of the current issues around a fund manager or company from using advertising as part of its private placement fundraising is the proposed changes to filing requirements for Form D. Few people I have spoken with actually want to use general solicitation like bulk emails, newspaper ads, or web ads. But they do want […]

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