Investment Law Lawyers in the USA

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.

In 2012, the US federal government passed a bill called the JOBS act. Among its provisions was one allowing for small investments in exchange for equity in that company or project without having to go through the SEC or qualify as an investor. What is the difference between crowdinvesting and crowdfunding, what is Kickstarter, and how does it all work from a legal standpoint?

Smooth Sailing for Companies Avoiding Reverse Mergers in their Going Public Transactions.

Under the Securities Act of 1933 as amended (the “Securites Act”), a Company that conducts an initial public offering (“IPO”) including in a going public transaction must adequately disclose material information to investors.

The offer and sale of securities is regulated by the Securities Act of 1933, as amended (“1933 Act”). Section 5 of the 1933 Act requires any offering to be registered with the SEC or exempt from registration.

Traditionally, private companies become publicly traded by registering an offering under the Securities Act of 1933, as amended. Another established method for private companies to obtain public company status is through a Reverse Merger (“Reverse Merger”) with a public shell company.

OTCMarkets Group operates the world’s largest electronic inter-dealer quotation system for broker-dealers to trade unlisted securities. The OTCMarkets Group categorizes issuers into three tiers to fit the wide spectrum of OTC issuers.

An Initial Public Offering (“IPO”) is often used by a private issuer seeking to go public as part of its going public transaction. An IPO involves registration with the SEC of an offering of securities by a private issuer.

Many private companies are unable to locate an underwriter prior to going public. A direct public offering (“Direct Public Offering”) provides a viable solution to this dilemma.

On July 10, 2013, the Securities and Exchange Commission (“SEC”) adopted a new rule to implement a JOBS Act requirement to lift the ban on general solicitation or general advertising for certain private securities offerings. The SEC also adopted rules that disqualify felons and other bad actors from participating in certain securities offerings as required by the Dodd-Frank Act.