NASAA And The DOC Warn Investors Of The “Madding Crowd’s Ignoble Strife”


Crowdfunding Caveats Issued

To say that the North America Securities Administrators Association was not pleased when Congress enacted the JOBS Act is like saying that Captain George Pollard and his crew had an unpleasant cruise on the Essex.  NASAA was especially wounded by Congress’ decision to create a crowdfunding exemption under the Securities Act of 1933 and to preempt state qualification requirements with offerings made pursuant to this new exemption.

When it comes to wounded feelings, time may be a gentleman, but not yet.  Last week, NASAA issued this press release warning investors of the potential dangers of crowdfunding.  The Department of Corporations also issued this Investor Alert.  Whatever your position on crowdfunding, the DOC’s message is a good one to take to heart – “It pays to be skeptical of investment opportunities you learn about through the Internet”.

Some Good News on Hard Money Lending Bill

Recently, I wrote about a bill, SB 978 (Vargas & Price) intended to help crack down on abusive financing techniques by hard money lenders: “Bill Targets Real Estate Industry and Borrowers“.  I’m pleased to report that the authors have amended the bill to remove the notice-filing requirement with respect to borrowers who rely on the exemption from qualification in Section 25102(e) of the Corporations Code.  However, the bill continues to impose special informational and suitability requirements on issuers that are principally engaged in the business of purchasing, selling, financing, or brokering real estate.  However, the bill now attempts to apply these requirements to these issuers only when they rely on specified exemptions and the offerings involve the offer or sale to non-accredited investors.

You can read the text of the bill as amended here.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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