Crowdfunding Isn’t Charity

Regina M. Joseph

Regina M. Joseph

“How do I get backers for my project?”

You see this question asked frequently on social media sites. The projects are sometimes serious, but have often advanced little more than a dream. The person seeking funds may have heard of Kickstarter and Indiegogo, and perhaps he or she has heard that people contributed to quirky projects like a person being willing to make potato salad; the site as of this writing reports 6,911 backers who have pledged a total of $55,492. Although this project began as a joke, the creator, having in fact made the potato salad, ended up using the proceeds for charity. Continue reading

Crowdfunding Disclaimers Aren’t Adequate to Avoid Liability under U.S. Securities Laws

Regina M. Joseph

Regina M. Joseph

Warning to non-United States equity crowdfunding sites: it’s not enough to warn that offerings are not being made to United States residents.  Your procedures must verify that investors are not United States residents.  On November 10, 2014, the United States Securities and Exchange Commission (“SEC”) entered a cease and desist order (the “Order”) against crowdfunding site Eureeca Capital SPC (Case No. 3-16265). Continue reading