The Crowdfunding Handbook by Cliff Ennico

Author:Cliff Ennico
Language: eng
Format: epub
Publisher: AMACOM
Published: 2016-05-18T16:00:00+00:00

The Portal’s Liability for Mistakes

Issuers, including their directors and officers, are liable under the JOBS Act to investors for “untrue or materially misleading statements” in their offering documents. Funding portals, their directors and officers, and lower-level employees who are “involved in the offering” are also liable to investors for “untrue or materially misleading statements” in an issuer’s offering documents, unless they or the issuer can prove they did not know, and in the exercise of reasonable care could not have known, of the untruth or omission.

The good news is that a funding portal’s liability is limited to the amount paid by each investor affected by the mistake, plus interest. The bad news is that investors can sue the funding portal even after they have sold their investments. Funding portals are, however, permitted to exercise discretion in limiting the offerings and issuers they allow on their platforms, which may give them some ability to limit their liability to investors under Regulation Crowdfunding.

Funding portals will also have liability to the SEC for, among other things, failing to maintain all required books and records relating to the offerings it handles, and for a funding portal’s own breach of the requirements of the JOBS Act and Regulation Crowdfunding (for example, by advertising a particular offering or highlighting one offering over another in violation of the rules). Funding portals that violate specific provisions of the JOBS Act and Regulation Crowdfunding will be subject to the same civil and criminal penalties as are imposed for violations of the Securities Exchange Act of 1934.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.