The Secrets of Wall St. Course – Crowdfunding

What constitutes a Crowdfunding effort?

What Crowdfunding effort results in a taxable activity?

SEC Reporting Companies can conduct a Crowdfunding effort.

What is the aggregate maximum amount that can be raised through a Crowdfunding effort within a 12-month period?

An investor can invest as much as he or she wants, up to the aggregate maximum amount within a 12-month period.

You must file Form C with the SEC and provide to investors and the relevant broker of funding portal, and make available to potential investors certain information.

An issuer can use more than one Regulation Crowdfunding Portal to conduct a Crowdfunding effort concurrently.

An issuer can use Form C outside the Regulation Crowdfunding Portal to sell to investors.

It is generally prudent to produce a Regulation D 504 or 506 private placement memorandum prior to filing Form C, because by using the identical information and disclosures in Form C as in Regulation D 504 or 506 private placement memorandum, it affords the ability to conduct two separate, concurrent offerings, one inside and one outside the Crowdfunding Portal.

Regulation Crowdfunding Portals can actively promote and solicit my Company’s securities.

Regulation Crowdfunding Portals can purchase my Company’s securities for their own account.

Regulation Crowdfunding Portals can Deny Access to my Company’s securities offering for almost any reason.

The statute and the final Regulation Crowdfunding rules prohibit an issuer from advertising the terms of the offering, except for notices that direct investors to an intermediary’s (Regulation Crowdfunding Portal) platform. The terms of the offering include the amount offered, the nature of the securities, price of the securities and length of the offering period.

If we offer $1,000,000 through a Regulation Crowdfunding Portal and we receive an over-subscription that results in selling more than $1,000,000 in our securities, we can accept those additional investments, as long as we made certain disclosures within our Form C and any concurrent Regulation D 504 or 506 private placement memorandums.

Before Regulation Crowdfunding under Title III, if my Company had over 2,000 investors it would become an SEC Reporting company whether the company’s securities were publicly traded or not. The number of investors I attract and obtain from the Regulation Crowdfunding effort does not count toward that number.

The burden of securities compliance is deflected from my Company to Broker-dealer(s) or Regulation Crowdfunding Portal I choose, because they’re SEC registered and FINRA Members.

Even a lawyer who represents him or herself in matters of law, has a fool for a client.