Securities regulators are paying attention to crowdfunding, even before JOBS Act regulations go into effect.
The Pennsylvania Securities Commission issued a cease and desist order to fund raisers Tabletop Arena, LLC and Christopher Melville, who claimed they were “crowdfunding.”
The Massachusetts Secretary of the Commonwealth (Securities Division) also brought an administrative complaint against Tabletop and Melville, noting that they fraudulently offered and sold unregistered securities through their website, as well as Facebook and Twitter.
Crowdfunding as Buzzword
From the perspective of securities regulators, Tabletop and Melville were just old-fashioned hucksters, hawking unregistered securities, while using a new buzzword, crowdfunding.
Well-established Pattern of Illegality
The investigation followed a pattern of illegal behavior that was established well before crowdfunding became a popular meme. The fund raisers said on the web they were looking to raise funds from investors in exchange for limited liability company membership interests. In one instance, a resident* from Pennsylvania inquired about the opportunity.
The fund raisers then tried to sell the equity securities to the Pennsylvania resident, without complying with applicable regulations, such as registering the securities or following an exemption, such as determining that investors and potential investors are “accredited.”
–Benjamin Wright
*It is probable that the Pennsylvania resident was an agent of the Pennsylvania Securities Commission. The PSA has a reputation for making "sting" inquiries about investment opportunities.
The Pennsylvania Securities Commission issued a cease and desist order to fund raisers Tabletop Arena, LLC and Christopher Melville, who claimed they were “crowdfunding.”
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| Securities Registration? |
Crowdfunding as Buzzword
From the perspective of securities regulators, Tabletop and Melville were just old-fashioned hucksters, hawking unregistered securities, while using a new buzzword, crowdfunding.
Well-established Pattern of Illegality
The investigation followed a pattern of illegal behavior that was established well before crowdfunding became a popular meme. The fund raisers said on the web they were looking to raise funds from investors in exchange for limited liability company membership interests. In one instance, a resident* from Pennsylvania inquired about the opportunity.
The fund raisers then tried to sell the equity securities to the Pennsylvania resident, without complying with applicable regulations, such as registering the securities or following an exemption, such as determining that investors and potential investors are “accredited.”
–Benjamin Wright
*It is probable that the Pennsylvania resident was an agent of the Pennsylvania Securities Commission. The PSA has a reputation for making "sting" inquiries about investment opportunities.
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