Crowdfunding 2012: The Next Big Thing or Entree to Digital Fraud? (Audio-only)

Taken from the briefing Crowdfunding: The Next Big Thing or Entree to Digital Fraud? recorded January, 2012.

Crowdfunding began more than a decade ago, when struggling artists and musicians used this method to raise online donations from their fans.  More recently, start-ups and other small companies have turned to this technique when traditional sources of capital dried up.

Although current U.S. securities law restricts companies from selling their stock directly to individual investors over the Internet, Congress is now considering legislation to change all this and to allow smaller enterprises to sell their stock online.  On December 1st, the Senate Banking Committee conducted hearings on Senator Scott Brown’s (R-Mass.) bill, S. 1791.  There is also a competing House bill.

It’s an innovative financial tool that has great promise and great peril.  Crowdfunding could aid investors and small businesses, at a time when they both desperately need help.  Or crowdfunding could become an efficient, online means for defrauding the investing public.  For those who advise their clients on start-up or venture capital financing, crowdfunding might create alternative capital raising strategies and risks for your clients.

Listen to Craig A. Newman, a partner with Richards Kibbe & Orbe LLP, Elad Epstein and Nicole Schmidt, Esq., Co-founders, Principals and Managing Directors of Oberon Securities, LLC, an investment banking firm that raises capital and provides advisory services to small and midsize companies, for a discussion of this important topic and emerging issues related to the pending legislation.

Lecture Topics  [Total Time: 01:06:06]

• Overview of current SEC registration requirements and exemptions applicable to crowdfunding
• Status of current legislative proposals
• Challenges faced by smaller enterprises in raising capital in a difficult economy: What’s the reality in this environment and are there alternatives?
• Risks, rewards and pitfalls in the current proposals
• Is there a middle ground?

Presentation Material

• Inside Alert: Social Media and Investing - Avoiding Fraud
• Testimony on Crowdfunding and Capital Formation
• SEC Charges lllinois-Based Adviser in Social Media Scam: Agency Issues Alerts on Social Media Risks for Investors and Firms
• Crowdfunding: The Next Big Thing or Entree to Digital Fraud? (Slide Presentation)
  Elad Epstein, Craig A. Newman, Nicole Schmidt
• Venture Captial Deals in the US (Slide Presentation)
  Elad Epstein, Nicole Schmidt