State Shuts Down Crowdfunding Website SoMoLend in Ohio
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Since the JOBS Act became law, numerous crowdfunding websites have popped up on the Internet. This month, the first enforcement action was brought against a crowdfunding website.
The Ohio Division of Securities issued a notice of intent to issue a cease-and-desist order against a crowdfunding platform known as SoMoLend and its owner and Chief Executive Officer, Candace Klein. Candace Klein is an advocate for crowdfunding who featured in well known media publications including Entrepreneur Magazine.
If issued, the order will force SoMoLend to close its crowdfunding platform.
SoMoLend’s website reflects that it is a “debt-based funding platform” connecting small businesses wotj lenders. According to the Ohio Division of Securities, SoMoLend’s business model is to post loan requests from businesses, sell the promissory notes issued by those businesses to investors, and service the repayment of the notes.
SoMoLend charges fees to issuer’s who offer the notes on their website.
The Ohio Division of Securities alleges that SoMoLend engaged in the unregistered sale of its own securities in violation of federal securities laws and the laws of the state of Ohio. According to the Ohio Division of Securities, SoMoLend offered securities to investors using general solicitation and general advertising through the SoMoLend website. Additionally, the allegations include that SoMoLend made false statements to investors and engaged in other fraudulent activity in connection with the sale of its securities. These fraudulent statements allegedly include financial projections, SoMoLend’s performance, and relationships with banks. Lastly, the allegations include that SoMoLend engaged in unregistered broker dealer activity by allowing business issuers to sell securities on its web-site in exchange for a fee.
Until the matter is resolved, SoMoLend has ceased making offers and sales of securities in Ohio on its web-site. Shortly after the notice, Candace Klein resigned her position.
ABOUT THE AUTHOR: Brenda Hamilton
Brenda Hamilton, our law firm’s founder and a securities lawyer has counseled clients in legal and compliance matters involving securities and financial transactions including underwritten and direct public offerings, equity and debt offerings, corporate legal and compliance matters and restructurings, go public direct transactions and disclosures, corporate identity theft and hostile takeovers. Brenda Lee Hamilton as a securities lawyer assists clients in all aspects of the go public direct process including filing of Form S-1 and other Registration Statements, Form 211′s with the Financial Industry Regulatory Authority (“FINRA”) and electronic trading applications with Depository Trust Company (“DTC”).
Copyright Hamilton & Associates, P.A.
More information about Hamilton & Associates, P.A.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
If issued, the order will force SoMoLend to close its crowdfunding platform.
SoMoLend’s website reflects that it is a “debt-based funding platform” connecting small businesses wotj lenders. According to the Ohio Division of Securities, SoMoLend’s business model is to post loan requests from businesses, sell the promissory notes issued by those businesses to investors, and service the repayment of the notes.
SoMoLend charges fees to issuer’s who offer the notes on their website.
The Ohio Division of Securities alleges that SoMoLend engaged in the unregistered sale of its own securities in violation of federal securities laws and the laws of the state of Ohio. According to the Ohio Division of Securities, SoMoLend offered securities to investors using general solicitation and general advertising through the SoMoLend website. Additionally, the allegations include that SoMoLend made false statements to investors and engaged in other fraudulent activity in connection with the sale of its securities. These fraudulent statements allegedly include financial projections, SoMoLend’s performance, and relationships with banks. Lastly, the allegations include that SoMoLend engaged in unregistered broker dealer activity by allowing business issuers to sell securities on its web-site in exchange for a fee.
Until the matter is resolved, SoMoLend has ceased making offers and sales of securities in Ohio on its web-site. Shortly after the notice, Candace Klein resigned her position.
ABOUT THE AUTHOR: Brenda Hamilton
Brenda Hamilton, our law firm’s founder and a securities lawyer has counseled clients in legal and compliance matters involving securities and financial transactions including underwritten and direct public offerings, equity and debt offerings, corporate legal and compliance matters and restructurings, go public direct transactions and disclosures, corporate identity theft and hostile takeovers. Brenda Lee Hamilton as a securities lawyer assists clients in all aspects of the go public direct process including filing of Form S-1 and other Registration Statements, Form 211′s with the Financial Industry Regulatory Authority (“FINRA”) and electronic trading applications with Depository Trust Company (“DTC”).
Copyright Hamilton & Associates, P.A.
More information about Hamilton & Associates, P.A.
View all articles published by Hamilton & Associates, P.A.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
