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Litigation Regulation White Collar Crime

Crowdfunding, Reg D and Reg A

The New Routes for Access to Capital and the Potential Legal and Regulatory Risks

Although the business community lauded the arrival of new crowdfunding laws, the enforcement community has had a different take on them. As stated in 2017 by then Deputy Attorney General Rod Rosenstein: “The potential downside of crowdfunding is that it occurs outside the watchful eye of a regulated banking and financial industry. Unregulated websites therefore provide a platform for criminals to defraud potential investors.”


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In 2012, President Obama signed into law the Jumpstart Our Business Startups Act (the JOBS Act), the stated purpose of which was to provide easier and simpler routes for small businesses to access capital markets without all the regulatory burdens imposed by the SEC on larger companies. In 2015, President Obama signed into law the Fixing America’s Surface Transportation Act (the FAST Act), to further ease small business’s access to capital formation. Another proposed refinement of the JOBS Act, JOBS Act 3.0, has been stalled in Congress but under the current regime, there are still plenty of potential regulatory and enforcement landmines of which both issuers and intermediaries, such as funding portals and platform hosts, need to be aware.

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