Massachusetts Quick to Crack Down on Crowdfunding

Tuesday, January 8, 2013

Crowdfunding, which allows smaller private companies to sell directly to investors, has recently come under fire in Massachusetts. Secretary of State William Galvin has filed fraud charges against two out-of-state oil and gas operations relative to their sale of unregistered securities to investors in Massachusetts.
In the first instance, Prodigy Oil and Gas LLC allegedly employed a cold-caller who had been found gulty of theft. Prodigy sold at least $464,000 in unregistered securities to one Massachusetts investor. In the second case, Synergy Oil LLC of Oklahoma allegedly sold $35,000 of unregistered securities to two investors.

Through the JOBS Act, signed into law April 5, 2012, small business and entrepreneurs will be able to sell equity (up to $1,000,000 annually) directly to investors to finance their business venture. Crowdfunding is technically not legal yet. Once it is allowed, it must occur on SEC- registered websites. The SEC has until 2014 to adopt rules relative to crowdfunding.

Would-be investors should heed the warning that Crowdfunding is not yet legal or regulated. Proceed at your peril.
Crowdfunding Takes Early Hit in Massachusetts
Are Massachusetts Crowdfunding Actions a Sign of Things to Come?

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