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Securities

Tuesday, October 20, 2015

What's a Vesting Schedule and Why Do I Need One?

Your startup is growing fast and now you have investors that want to give you money. All of a sudden, your partner that owns 50% decides to leave the company. Without a vesting schedule, this situation could be a disaster because...


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Thursday, December 11, 2014

Investing in Film – Security Law Implications.

The film industry and investors alike were put on notice recently due to the ruling of U.S. District Judge Katherine Forrest, who dismissed a major lawsuit against Paramount Pictures.  Specifically, a group of investors brought a claim for fraud against Paramount owned Viacom in connection with numerous film financings over the last decade.  Included in their claim was an accusation that Paramount had mislead investors regarding the distribution plans of the films, in order to raise capital.  The investors claimed that Paramount represented that it would sell the international distribution rights, but instead opted to self-distribute.   This distribution decision, argued the investors, deprived them of certain revenue to which they were entitled....

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Friday, October 10, 2014

Intrastate Offering Exemption

Question: Can an issuer use its own website or social media presence to offer securities in a manner consistent with Rule 147?

Answer: Issuers generally use their websites and social media presence to advertise their market presence in a broad and open manner so that information is widely disseminated to any member of the general public. Although whether a particular communication is an “offer” of securities will depend on all of the facts and circumstances, using such established Internet presence to convey information about specific investment opportunities would likely involve offers to residents outside the particular state in which the issuer did business.....


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Monday, September 22, 2014

SEC and SBA partnership

The Securities and Exchange Commission announced that it has partnered with the U.S. Small Business Administration to host seminars detailing new fundraising methods under the Jumpstart Our Business Startups (JOBS) Act.    The release notes that one topic of discussion will be the pending crowdfunding regulations.   While current platforms offer either perk based investment opportunities or investment opportunities to accredited investors, the new regulations will expand this market drastically allowing non-accredited investors to participate in many investment opportunities.  This new market will also offer new opportunities for small companies looking to raise capital... 

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Thursday, September 11, 2014

Rise of the Micro VC

The most significant trend in the venture capital community is the rise of seed or micro-venture funds.  These funds target early stage companies and typically invest between $25,000 and $500,000 in a particular company.  They are on the uptick, increasing their investment activity by 77% as compared to Q1 2011. The managers of these funds range from former venture capitalists, to angels, to larger venture firms that use these funds to prospect later opportunities.

In my experience...


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Tuesday, August 5, 2014

Tips to avoid fraudulent private placements

Corporate On August 4, the U.S. Security and Exchange Commission’s Office of Investor Education and Advocacy issued an Investor Alert to help investors identify potentially fraudulent unregistered private placements.  The Office cautioned investors to be cognizant of the following common signs of potential fraud:

1.  Claims of high returns with little or no risk... 


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Wednesday, July 23, 2014

SEC to target small and large violations

In recent remarks at a Securities Enforcement Forum, SEC Chairperson Mary Jo White offered a theme for the SEC’s enforcement program, “to be everywhere to enforce our securities laws and protect investors.”  She noted that... 

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Friday, July 11, 2014

HALOS Act

A new bill proposed by Senator Murphy, titled the “HALOS Act”, or “Helping Angels Lead our Startups Act” was recently released.   This bill seeks to clarify when a company is in engaging in a 506(c) “general solicitation” offering.  As you might recall, Section 506(c) was created by the JOBS Act and allows a company to use general solicitation if it undertakes certain additional investor verification procedures to ensure that investors meet the accredited investor standard.  The HALOS Act is an attempt to preserve the spirit of the JOBS Act and alleviate this burden from demo days and other standard start-up events.  


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Friday, May 9, 2014

Kickstarter fraud; Washington State files consumer protection suit

State regulators have started to notice Kickstarter.  Specifically, the attorney general of the state of Washington brought suit against a company and its owner who used Kickstarter to raise funds, but failed to produce the reward promised... 

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Thursday, April 17, 2014

Crowdfinancing - Statistics Part II

The top 5 States by capital committed (during the time period of September 2013 through February 2014) are:

1.  California 
2.  New York
3.  Oklahoma
4.  Texas
5.  Florida


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Thursday, March 27, 2014

Crowdfinancing - Statistics

According to a very interesting study published by Crowdnetic (http://www.crowdnetic.com/reports/feb-2014-report), there are approximately 2,500 private issuers publicly raising capital.  Of these issuers, 32% are in the technology sector, and 43% are in the services sector.   These sectors have accounted for 24% and 37%, respectively, of the total capital committed.   Interestingly, the financial sector accounts for 20% of the capital committed but only 5% of the number of active issuers.  The financial sector also has the highest average amount of capital committed ($1,000,000) by issuer's successful raising capital.  In contrast, the average for all other sectors is approximately $300,000.

The top ten industries by capital commitments across all sectors are:


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