Crowdfunding
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CrowdFunding describes the collective cooperation, attention and trust by people who network and pool their money via the Internet to support efforts initiated by other people or organizations. CrowdFunding occurs for any variety of purposes, from disaster relief to citizen journalism to artists seeking support from fans, to political campaigns, to funding a startup company, movie or small business or creating free software. Crowdfunding for the online sale of securities was signed into law on April 5, 2012 by President Obama, as part of the JOBS Act. Crowdfunding isn't currently legal and remains subject to the SEC approving applicable rules, which they are currently drafting.
Ellenoff Grossman & Schole has been heavily involved in the program since its inception. The Firm has sponsored conferences, webinars and has been invited to speak at different events on the topic. Douglas S. Ellenoff, a member of the Firm, has met with the SEC on many occasions to discuss many aspects of the proposed new law, how the industry currently operates and how both the SEC and FINRA will register and regulate funding portals and the crowdfunding activity to be conducted. Additionally, EG&S is working with other securities professionals internationally to assist them with their fashioning of appropriate legislation to permit crowdfunding for securities in their jurisdictions.
The Firm is actively engaged with clients (funding portals, broker-dealers, technology solution providers, software developers, investors and entrepreneurs). In cooperation with the industry trade association, the Firm is discussing what level of regulatory review and monitoring is appropriate by the SEC and FINRA in balancing the interests of the program with investor protection. We have several attorneys that have become key players in the program, including Douglas S. Ellenoff, Barry I. Grossman, Joan Adler, Adam Mimeles, David Selengut, Sarah Williams, Matthew Bernstein and George Georgiades. In particular, Joan Adler, a member of our Broker Dealer Regulatory Group, has shepherded many firms through the broker dealer membership process. She has participated on panels with the FINRA Membership Department to develop the New Membership Application Program and will be proactively working with regulators to establish guidelines for funding portals. And George Georgiades has been closely following the legal developments since inception and is actively advising industry members on the proposed regulations. Mr. Georgiades has written a CrowdFunding Alert that summarizes the key provisions and current status of the new reforms. Click here to read the alert.
Law Review Articles of Interest:
1. Heminway, Joan MacLeod. Hoffman, Shelden Ryan “Proceed at Your Peril: Crowdfunding and the Securities Act of 1933.” Tennessee Law Review, Vol. 78, p. 879, 2011
Link: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1875584
2. Hazen, Thomas Lee. “Crowdfunding or Fraudfunding? Social Networks and the Securities Laws – Why the Specially Tailored Exemption Must be Conditioned on Meaningful Disclosure.” North Carolina Law Review, Forthcoming May 20, 2012.
Link: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1954040
Some of Mr. Ellenoff's past speaking engagements:
Mr. Ellenoff was invited by FINRA to speak at their 2013 annual conference in Washington D.C. Mr. Ellenoff spoke on the JOBS Act and the regulatory and compliance developments related to the JOBS Act.
Mr. Ellenoff was invited by Oxford Valuation Partners, Crowd Valley and KPMG to participate in their event: The new Crowdfunding Landscape for Equity Investment. The landscape of funding options is rapidly changing, driven by new SEC no-action letters and changes stemming from the JOBS Act that are permitting a broader scope of activity in the space outside of the traditional networks.
Mr. Ellenoff was one of the keynote speakers at the Silicon Valley Crowdfund Ventures Conference.
Mr. Ellenoff was invited by NowStreet to participate in Part I of their webinar series, “Capitalizing on Financial Innovation." The webinar focused on crowdfunding and aimed at properly preparing investors, asset allocators and issuers for the forthcoming Crowdfunding Revolution.
Mr. Ellenoff was invited by Merrill DataSite to participate in their webinar "JOBS Act: Leveling the Playing Field for Small/Micro-Cap Companies in the Capital Markets." Topics addressed included: how the JOBS Act redefined the playing field for small and micro-cap companies; which industries and regions present the best opportunities for investment in the small/micro-cap space; what are the financing and venture opportunities currently for start-ups and how has crowd-funding changed the game; what impact will the JOBS Act have on the IPO market in 2013, and what impact will the JOBS Act have on larger companies in the long-term.
Mr. Ellenoff was invited to speak at the State of Equity-Based Crowdfunding press conference at the National Press Club in Washington, D.C. The members of the Crowdfunding Professional Association who spoke at the event went on to meet with lawmakers and the press at Capitol Hill for an informational luncheon. Leaders of the venture and Crowdfunding community pushed for immediate action on fulfilling the promises made in last year’s Jump Start Our Businesses Startups Act (JOBS Act) to make equity- and debt-based Crowdfunding a reality in the U.S.
Mr. Ellenoff was invited by Canada's Venture Capital & Private Equity Association (CVCA) to participate in their Crowdfunding in the Canadian Context conference. Mr. Ellenoff spoke about
Crowdfunding in the US. Click here to view his power point presentation
Mr. Ellenoff was invited by Harvard Business School Association of Boston to participate in their HBSAB 2013 New Venture Program (NVP) to discuss the viability of the emerging crowdfunding industry.
Participated in "Crowdfund Texas: Impact of the JOBS Act on Texas Investors and Start-ups" in Austin, Texas. It was a premiere industry conference that brought together Texas investors, start-ups, incubators, accelerators, and academic leaders in entrepreneurship for an intensive day of interactive educational sessions from leading thought leaders. Mr. Ellenoff was invited to speak on several panels as well as one exclusively for the media.
Participated in “The Crowdfund Act – Framing the new regulatory landscape Symposium” sponsored in Washington by the Crowdfund Intermediary Regulatory Advocates (CFIRA). Mr. Ellenoff spoke on two different panels: The Mechanics of a Crowdfund Offering and Reaching the Crowd.
Attended the first national conference endorsed by the Crowdfunding Professional Association (CfPA), held at the University of Utah Guest House and Conference Center. Mr. Ellenoff was the keynote speaker at the conference.
Was interviewed by Brett Johnson with One Med Place on CrowdFunding.
Participated in an invitation only JOBS Act Roundtable at New York University.
Mr. Ellenoff spoke at New York's first Crowdfunding 101 Workshop. He spoke about the firm's role in the process that generated the JOBS Act, our current activity in assisting with the SEC's rule-making process and the current & future legal issues that will effect crowdfunding platforms planning to present equity-based crowdfunding solutions for small businesses.
Ellenoff Grossman & Schole LLP was the premier sponsor at Deal Flow Media's CrowdFunding Conference, in New York City. Mr. Ellenoff opened the conference with his keynote address focusing on the outlook of the CrowdFunding Market.
Attended meetings between several department heads of the SEC and the crowdfunding industry, including the The National Crowdfunding Association (NLCFA).
Participated in Washington DC's first national crowdfunding conference. CrowdCheck hosted experts from the US Small Business Administration, Capitol Hill, think tanks, startups and the securities industry at the conference, entitled "The Wisdom of the Crowd." Mr. Ellenoff spoke on fraud prevention for crowdfunding.
Mr. Ellenoff was invited by the Inter American Development Bank and Multilateral Investment Fund to participate in their workshop “Crowdfunding: Financing Ideas, Entrepreneurs and Institutions The Market in Latin America and the Caribbean.” Mr. Ellenoff was part of two different panels: Discussion of Regulatory Aspects and Business Models Emerging due to the JOBS Act and Crowdfunding with Financial Returns.
