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CrowdFunding to Raise Capital for Real Estate Investments is Still Not a Done Deal

posted May 24, 2013, 11:18 AM by   [ updated Jun 6, 2013, 9:23 AM ]
To keep you up to date! Two items posted as alerts to syndicators that I thought would be interesting to you.
 First, the SEC and the North American Securities Administrators Association (NASAA) posted these warnings about crowdfunding

  • Information Regarding the Use of the Crowdfunding Exemption in the JOBS Act “On April 5, 2012, the Jumpstart Our Business Startups (JOBS) Act was signed into law. The Act requires the Commission to adopt rules to implement a new exemption that will allow crowdfunding. Until then, we are reminding issuers that any offers or sales of securities purporting to rely on the crowdfunding exemption would be unlawful under the federal securities laws.” 
  • From the SEC “Reports about small business owners who are trying to solicit investors before regulations are written were among the concerns that prompted the North American Securities Administrators Association (NASAA), an organization of state securities regulators, to issue an advisory about crowdfunding for small businesses on Wednesday.” 
  • From NASAA State regulators are also concerned about the threat of potential con artists, claiming to be crowdfunding brokers or to represent online portals through which future deals must be conducted. "Be aware of unscrupulous persons offering to take fees from you now to help you raise capital over the Internet," the alert reads. The offers could be a scam because the law has not been implemented yet, said regulators. 
  • From NASAA As we had said in previous messages, crowdfunding is a long way from being implemented. Some writers are now projecting April 2013 as the earliest date. 
  • SEC to Miss Deadline for Reg. D, Rule 506 Regulations In prepared testimony, Securities and Exchange Commission Chairman Mary Schapiro told a U.S. House oversight panel that certain rule writing deadlines imposed by the JOBS Act "are not achievable." "The 90-day deadline (for the Reg. D, Rule 506 changes) does not provide a realistic timeframe for the drafting of the new rule, the preparation of an accompanying economic analysis, the proper review by the commission, and an opportunity for public input," she said The legislation had set July 4, 2012 for the date the rules regarding the ability to advertise in Reg. D, Rule 506 offering would be published. That day has come and gone. As we had suggested, based on the practice of publishing proposed regulations, accepting comments during a review period and then issuing the final regulations, there was little likelihood that all work would be completed according to the dates stated in the legislation. In the past month I have seen several authors tell the public that they can now advertise for investors in Reg. D offerings and even advertise for them on the internet! Perhaps, someday, but that day has not come yet.