Part 1 of this series discussed the 12 basic requirements that must be met to utilize Michigan’s new intrastate crowdfunding exemption.
This post will take a deeper look at Requirement 2. As noted in Part 1, Requirement 2 states that the offer must meet the requirements for the federal exemption for intrastate offerings under Section 3(a)(11) of the Securities Act of 1933 (the “1933 Act”). Read More ›
Note: This post is Part 1 of a multi-part series regarding Michigan's new crowdfunding law
It's official, crowdfunding is legal in Michigan. So, what does that mean for your business? Let's start with the basics.
Federal and state law prohibit a business from selling a security unless: (A) the security is registered with the SEC, or (B) an exemption from registration is applicable. Registration is expensive, so nearly all businesses try to satisfy an exemption from registration. Historical exemptions have made it difficult for businesses to receive investment from "non-accredited" investors and flat out prohibit "general solicitation" (i.e., public advertising of the investment, including advertising on the Internet). Those historical difficulties, however, have recently been eased. Read More ›
Posting of Issuer Disclosures. In prior blog posts, we described the disclosure obligations imposed on the issuer (the company that is raising capital) under the SEC's proposed crowdfunding regulations. (Read: The SEC Crowdfunding Proposed Regulations: Overview of Offering Statement & Non-Financial Disclosure Requirements and The SEC Crowdfunding Proposed Regulations: Overview of Issuer Financial & Disclosure Requirements). The proposed regulations impose certain requirements on the funding portal to make sure that these issuer disclosure obligations are met. Specifically: Read More ›
We have all seen patent numbers marked on all kinds of products. In fact as I sit and write this article I can report that there are several items in my office with patent markings including my hole punch, stapler, Dictaphone and the insoles in my shoes.
So why is that? There has got to be a reason, right?
The reason is that if products are not appropriately marked before they enter the stream of commerce, the damages that the manufacturer can receive in a patent infringement action against someone that has copied that product are reduced. 35 USC §287(a) provides: Read More ›
Business owners are increasingly turning to cloud storage as an alternative to maintaining their own servers. The three most popular cloud storage services are Dropbox, Google Drive and SkyDrive. Each service comes with a specific amount of free storage and allows users to upgrade for a fee. For a helpful comparison of these three choices, see here. Cloud storage providers are promising upgraded security, but there are certain steps business owners can take themselves to protect their data. Read More ›
In the release accompanying the proposed crowdfunding regulations, the SEC explains its view that Congress anticipated that crowdfunding would occur exclusively through electronic media. The SEC's proposed rules are intended to facilitate the exclusive use of electronic media.
Under the proposed rules, before an investment commitment may be accepted by an intermediary, the intermediary must require the investor to:
The SEC's proposed crowdfunding regulations include a number of specific steps that an intermediary is required to take in order to reduce the risk that an issuer (the company raising capital) does not use the intermediary's platform to engage in fraud. The intermediary is viewed as a check and balance on the crowdfunding marketplace. Among an intermediary's responsibilities are the following: Read More ›
Reminder: The SEC public comment period is coming to a close Feb. 3, 2014.
Neither a funding portal, nor its officers, directors, partners or persons occupying a similar status with the funding portal, are allowed to:
The role of a funding portal is to facilitate a crowdfunded transaction involving a sale from the issuer (the company raising capital) to the investor. A funding portal does not have the legal authority to facilitate secondary market activity, i.e., bringing together a seller and buyer in a transaction in which the seller is an investor who previously acquired the security either from the issuer or from another investor. In order to legally facilitate secondary market transactions, the intermediary would have to register as an exchange or alternative trading system. A funding portal registration does not grant this authority. Read More ›
We continue our series on the proposed crowdfunding regulations issued by the SEC on Oct. 23, 2013 by turning our attention to the portion of the proposed regulations that relate to intermediaries of crowdfunding transactions.
An "intermediary" is the facilitator of a crowdfunding transaction through which issuers offer to sell securities and investors sign up to purchase securities. A registered broker may act as a crowdfunding intermediary. The activities involved in acting as an intermediary are already within the scope of the licensed activities of a registered broker. Read More ›