Latest from Elizabeth L. Carter Blog

https://video.wixstatic.com/video/49402b_2fe2fa2157df4925adf948eca8cff5e8/1080p/mp4/file.mp4 U.S. data privacy laws have ties with the European Union (“EU”). As we mentioned in our last blog, with the rise of social media and e-commerce there is a heightened focus on data privacy. Users around the world are providing their personal data such as credit card numbers, real names, postal addresses, social security numbers, demographics, income, browsing history and search history, and age, in order to access, purchase, and communicate online. The U.S. has only recently begun to create data privacy laws, all of which vary by State. Currently, only California and Virginia have legislation signed into law…
https://video.wixstatic.com/video/49402b_45f5feb7f3bf499a8f102e184acc3542/1080p/mp4/file.mp4 With this new digital age that we are living in, it is no surprise that users are providing their personal data in order to access social media platforms, sign up for online mailing lists, purchase streaming subscriptions, shop online, invest, raise capital, and more. But at what cost? In order to access seemingly free platforms, users are required to share their personal information such as first and last name, address, and credit card number. Data privacy laws aim to protect this very information. Companies have been collecting, sharing, and selling your data without much regulation, until now. Recently, TikTok…
https://video.wixstatic.com/video/49402b_21cddde25134424ca7637ede118955de/1080p/mp4/file.mp4 Securities fraud is a serious act that can apply to any company, no matter how large or small. This is why it is important that businesses interested in raising capital ensure legal compliance with required securities disclosures prior to making an offer to investors. What is securities fraud exactly? The Securities and Exchange Act of 1934 (the “1934 Act”) defines fraud and misrepresentation in securities as “any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.” For example, knowingly making false statements, misleading investors, and omitting material information, such…
https://video.wixstatic.com/video/4dc8bf_bc39c95455eb4040a0f748b776c7bded/1080p/mp4/file.mp4 The Jumpstart Our Business Startups Act (the “JOBS Act”), enacted on April 5, 2012, established a regulatory structure for startups and small businesses to raise capital through securities offerings through ,crowdfunding. On October 30, 2015, the SEC adopted the rules to implement Title III of the JOBS Act (“Title III ”). Title III added Section 4(a)(6), to the Securities Act of 1933 for certain crowdfunding transactions (“Regulation Crowdfunding or Reg CF”). Some Diversity Aspects of Reg CF? Reg CF is an exemption from the registration requirements in Section 12(g) of the Security Exchange Act of 1934, which was…
https://video.wixstatic.com/video/4dc8bf_98851898d2f748229b22219caa74732e/720p/mp4/file.mp4 What is an Investment Company? The Investment Company Act of 1940 (“ Act”) defines an “investment company” as an ,Issuer that “holds itself out as being engaged primarily or proposes to engage primarily, in the business of investing, reinvesting or trading securities.” In other words, an investment company is a fund or business that invests in other businesses. Even if a company depicts itself as operating businesses rather than primarily passively investing in other businesses, the company may still come within the Act’s coverage. The Act requires investment companies, funds, or businesses that invest in other businesses, to register…
https://video.wixstatic.com/video/4dc8bf_80a71043557b49aa9deb145230d21f80/720p/mp4/file.mp4 The Investment Advisers Act of 1940 (“Act”) is a U.S. federal law that was primarily intended to regulate the business of rendering personalized investment advice to individuals and businesses.. Personalized investment advice is individualized advice attuned to a particular client’s needs. It does not include generalized information or information that generally circulates to the public. After the stock market crash of 1929 and the depression of the 1930s, the Act was designed to eliminate certain abuses in the securities industry that were found to have contributed to these events. This included holding Investment Advisers accountable if they provided fraudulent…
https://video.wixstatic.com/video/4dc8bf_a5d2cb031c1b491f80b46076d9fbf0e5/1080p/mp4/file.mp4 The debate on whether cryptocurrencies are considered securities is still ongoing. Being that this is a more than $1.6 trillion dollar industry, of course the Securities and Exchange Commission (“SEC”) has an interest in protecting users and investors alike. Similar to most discussions surrounding what is and what is not a security, the answer is not as straightforward as one would like. A cryptocurrency (“crypto”) is a digital form of currency that people can use to buy goods or services. There are more than 6,700 cryptocurrencies that are publicly traded. Interestingly, senior SEC officials have made statements concluding that…
https://video.wixstatic.com/video/4dc8bf_17c6b1791586496a94bea7e0c44d48c3/720p/mp4/file.mp4 Section 3(a)11 Exemption Section 3(a)(11) of the Securities Act is generally known as the “intrastate offering exemption.” This federal exemption seeks to facilitate the financing of local business operations. Section 3(a)(11) concerns State-specific securities that meet certain exemption requirements. In order to qualify for the intrastate offering exemption at the federal level, a business must: (1) be organized in the State where it is offering the securities, (2) carry out a significant amount of its business in that State and, (3) make offers and sales only to residents of that State. The Section 3(a)(11) intrastate offering exemption does not…
Right now, non-fungible tokens (NFT) are all the buzz in the cryptocurrency and securities law space. People all over are trying to figure out what is an NFT. Specifically, people want to know how it is used and traded, whether it is something that will be affected by securities regulations, and whether there are any other legal considerations. There can not be a discussion about NFTs without mentioning Beeple’s recent sale. On March 11th, Beeple—a digital artist from North Carolina—sold an NFT for an astonishing $69.3 million dollars. His piece titled “Everydays: The First 5000 Days” is a collage of…
Under the federal securities laws a company may not offer or sell securities unless the offering has been registered with the SEC or an exemption from registration is available. A securities offering exempt from registration with the SEC is sometimes referred to as a private placement or an unregistered offering. Exempt private placements are done in reliance upon Sections 3(b) or 4(2) of the 1933 Act as constructed or under Regulation D as promulgated by the SEC, or both. Section 4(a)(2) of the Securities Act, sometimes referred to as the “private placement” exemption, exempts from registration transactions by an issuer…
https://video.wixstatic.com/video/4dc8bf_0a4251d0a604442cabdad21a0053394a/1080p/mp4/file.mp4 If you are thinking about making a publicly advertised offering for securities with a target raise of more than $10 million you might want to ask an attorney about Regulation A+. As a result of the Jumpstart Our Business Startups (JOBS) Act of 2012, the Securities and Exchange Commission (SEC) issued final rules that amended Regulation A into Regulation A+. This regulation provides another opportunity for small business owners to access capital from both accredited and non-accredited investors, while also protecting investors. There are two tiers of offerings for securities under Regulation A+ . Tier 1 allows for securities…
If you are thinking about making a publicly advertised offering for securities with a target raise of more than $10 million you might want to ask an attorney about Regulation A+. As a result of the Jumpstart Our Business Startups (JOBS) Act of 2012, the Securities and Exchange Commission (SEC) issued final rules that amended Regulation A into Regulation A+. This regulation provides another opportunity for small business owners to access capital from both accredited and non-accredited investors, while also protecting investors. There are two tiers of offerings for securities under Regulation A+ . Tier 1 allows for securities offerings…
https://video.wixstatic.com/video/4dc8bf_4f8572ca12574c3aa6458e4b762ba3ce/720p/mp4/file.mp4 The Securities and Exchange Commission (SEC) created the notion of “accredited investors” to ease the tension between their double duty to protect individual investors in private securities offerings and to facilitate capital formation and investment. An” accredited investor” is an individual or an entity that is presumed to not require the protection of federal or state securities laws due to their income or net worth. Currently, an accredited investor is defined by the SEC as any natural person who has over $200,000 in annual income in each of the two most recent years or over $1,000,000 in net worth,…
https://video.wixstatic.com/video/4dc8bf_964fd7558d9e4a76a1876612666b5f3c/1080p/mp4/file.mp4 At the root of cooperatives is the African-American community. However, many Black cooperatives throughout history found it hard to sustain themselves due to the lack of sufficient capital in the community. This is true for many cooperatives, but especially for Black cooperatives. This blog is going to highlight the African American history of cooperatives and also provide information on how a cooperative, especially one owned and controlled by marginalized communities, can raise capital to fund its enterprise. Before we begin, it is important to note that you should always consult a securities attorney when considering raising capital from investors.…
https://video.wixstatic.com/video/4dc8bf_e852c5ebbc0f4393b352ff6d5be76b03/1080p/mp4/file.mp4 Lack of access to financial capital is a barrier for many entrepreneurs who seek to grow their business ventures. Congress and the Obama Administration enacted the Jumpstart Our Business Startups Act (JOBS) Act to help solve this lack of access to financial capital by democratizing the entrepreneurial ecosystem through investment crowdfunding. The JOBS Act established crowdfunding provisions that allow early-stage businesses to offer and sell securities up to a certain dollar limit, adjusted for inflation every five years, without having to register this offer with the U.S. Securities Exchange Commission (SEC). The main idea behind the JOBS Act was…
https://video.wixstatic.com/video/4dc8bf_5e4ff5dcc13b48168d083170c3cc8d6b/1080p/mp4/file.mp4 As we continue to navigate through this pandemic, now more than ever, entrepreneurs have to get creative when it comes to funding their businesses. This includes creating crowdfunding campaigns that target social media followers, clients, customers, and other supporters in order to raise through small individual contributions from a large number of people. In fact, regulation crowdfunding has grown in popularity with more and more startups and small businesses using it as a premiere way to raise early-stage capital. For example, Aisha Grant raised $82,000 from over 1,700 donors to help capitalize Salt Eaters. Just as Aisha, one can…