Stubbs Alderton & Markiles, LLP

SEC’s Division of Trading and Markets Issues FAQs on Crowdfunding Intermediaries

heidi — Wed, 16 May 2012 00:19:15 +0000

(May 16) The SEC’s Division of Trading and Markets has published Frequently Asked Questions guidance on its website regarding the implementation of the crowdfunding intermediary provisions of Title III of the JOBS Act. The crowdfunding exemption will require issuers to use intermediaries – either a broker or a “funding portal” registered with the SEC – to complete crowdfunded offerings. Funding portals will also be required to become members of a national securities association registered under Section 15A of the Exchange Act. Currently, FINRA is the only such association in existence. Intermediaries will be subject to the duties and prohibitions prescribed by the JOBS Act, the rules and regulations the SEC will adopt thereunder, as well as the rules and regulations of their applicable association.

Please note that the FAQs (i) are subject to update and revision at any time, (ii) are not rules, regulations or statements of the SEC, and (iii) have been neither approved nor disapproved by the SEC. The crowdfunding intermediary FAQs can be found at: http://www.sec.gov/divisions/marketreg/tmjobsact-crowdfundingintermediariesfaq.htm

Currently, the FAQs provide as follows:

Responses to Frequently Asked Questions

Question 1.

I would like to operate a crowdfunding intermediary. Am I required to register with the SEC before doing so?

Answer:

Yes. You must register with the SEC either as a broker or as a funding portal.

Please keep in mind that the SEC still has to write rules to implement the crowdfunding provisions of the JOBS Act. Until the SEC has completed this rulemaking, you cannot act as a crowdfunding intermediary, even if you are already a registered broker. The Division of Corporation Finance also has reminded issuers that any offers or sales of securities purporting to rely on the crowdfunding exemption would be unlawful under the federal securities laws until the SEC’s rulemaking is complete.

Question 2.

How do I register with the SEC as a funding portal?

Answer:

The SEC must adopt rules governing funding portals before permitting anyone to register with the SEC as a funding portal. These rules will address the form and process needed to register with the SEC as a funding portal.

Funding portals also must become members of a national securities association that is registered under Section 15A of the Exchange Act. Today, FINRA is the only national securities association in existence that is registered under Section 15A of the Exchange Act.

Question 3.

I would like to operate as a funding portal. Do I need to register with the Financial Industry Regulatory Authority (FINRA)?

Answer:

All funding portals must become members of a national securities association that is registered under Section 15A of the Exchange Act, in addition to registering with the SEC. Today, FINRA is the only national securities association in existence that is registered under Section 15A of the Exchange Act.

Question 4.

Are there are any limitations on what a funding portal can do?

Answer:

Among other things, the JOBS Act imposes several restrictions on the activities of a registered funding portal. A funding portal is not permitted to:

provide investment advice or make recommendations;
solicit purchases, sales, or offers to buy the securities offered or displayed on its website or portal;
compensate employees, agents, or other persons for such solicitation or based on the sale of securities displayed or referenced on its website or portal;
hold, manage, possess, or otherwise handle investor funds or securities; or
engage in any other activities the SEC determines to prohibit in its crowdfunding rulemaking.

In addition, each funding portal and each crowdfunding broker is prohibited from:

compensating promoters, finders, or lead generators for providing the intermediary with the personal identifying information of any potential investor; or
allowing its directors, officers, or partners (or any person occupying a similar status or performing a similar function) to have a financial interest in any issuer using the services of the intermediary.

Question 5.

I would like to operate a crowdfunding intermediary. In addition to registering with the SEC and a national securities association, what should I know?

Answer:

There are many considerations in determining whether to operate a crowdfunding intermediary. At a minimum, you should understand the legal obligations that the JOBS Act assigned to crowdfunding intermediaries. For example, crowdfunding brokers and funding portals have significant duties under the JOBS Act to provide information to investors, reduce the risk of fraud and, where required under the Act, ensure that investors and issuers satisfy the requirements outlined in Title III of the JOBS Act.

The JOBS Act requires these intermediaries to, among other things:

provide disclosures that the SEC determines appropriate by rule, including regarding the risks of the transaction and investor education materials
ensure that each investor: (1) reviews investor education materials; (2) positively affirms that the investor understands that the investor is risking the loss of the entire investment, and that the investor could bear such a loss; and (3) answers questions that demonstrate that the investor understands the level of risk generally applicable to investments in startups, emerging businesses, and small issuers and the risk of illiquidity;
take steps to protect the privacy of information collected from investors;
take such measures to reduce the risk of fraud with respect to such transactions, as established by the SEC, by rule, including obtaining a background and securities enforcement regulatory history check on each officer, director, and person holding more than 20 percent of the outstanding equity of every issuer whose securities are offered by such person;
make available to investors and the SEC, at least 21 days before any sale, any disclosures provided by the issuer;
ensure that all offering proceeds are only provided to the issuer when the aggregate capital raised from all investors is equal to or greater than a target offering amount, and allow all investors to cancel their commitments to invest;
make efforts to ensure that no investor in a 12-month period has purchased crowdfunded securities that, in the aggregate, from all issuers, exceed the investment limits set forth in section Title III of the JOBS Act; and
any other requirements that the SEC determines are appropriate.

In addition, under the JOBS Act, an intermediary should be aware of the prohibited activities listed in response to Question 4.

For more information regarding this Alert, other provisions of the JOBS Act or crowdfunding initiatives, contact John McIlvery, Group Chair of SAM’s Public Securities practice area at (818) 444-4502.

SAM Client Runic Games Featured in Forbes “5 Reasons ‘Torchlight 2′ Is a Better Bang for Your Buck Than ‘Diablo 3′”

heidi — Tue, 15 May 2012 18:55:18 +0000

In this month’s Forbes online magazine, SAM Client Runic Game‘s ‘Torchlight 2‘ receives favorable accolades in a comparison to Blizzard’s ‘Diablo 3′ To read more, click here.

For more information about our Interactive Entertainment & Video Games practice, contact Steve Goldstein, at 818.444.4510 or sgoldstein@stubbsalderton.com

SAM to be Signature Sponsor of Southern California Angel Summit- May 16, 2012

heidi — Tue, 15 May 2012 18:33:53 +0000

Stubbs Alderton & Markiles, LLP will be a Signature Sponsor for the First Annual Southern California Angel Summit on May 16, 2012 at the University of Southern California Edison Auditorium. This historic kick-off event is an opportunity for many of the SoCal Angel Investment Networks to collaborate, network and forge stronger relationships. We are proud to have the University of Southern California host this event.

With increased syndication, communication and idea-sharing, all players in the start-up ecosystem will benefit. As a result, this will lead to greater entrepreneurial success and ultimately higher returns for investors.

Event Details
First Annual Southern California Angel Summit
Wednesday, May 16, 2012
Core Meeting: 2:00PM – 5:00PM
Cocktail Mixer: 5:00PM – 6:00PM
Click Here to Download the Agenda

University of Southern California
Edison Auditorium – Hoffman Hall (Basement)
Park in Parking Structure X (PSX) – Gate 3

To register, click here

GumGum Expands To Canada In First International Deal

heidi — Tue, 15 May 2012 01:26:28 +0000

SAM Client GumGum, the provider of in-image advertising services which is backed by GRP Partners, First Round Capital, New Enterprise Associates and Crosscut Ventures, has signed a deal with a Canadian firm, in its first deal out of the country, according to the company Wednesday. GumGum, which is run by Ophir Tanz, said the deal with Oboxmedia will bring its in-image ads to more 40 websites in the online entertainment area targeted at Canadians. GumGum‘s technology targets and shows advertisements within images on a publisher’s website.

Stubbs Alderton & Markiles, LLP Partner Kevin DeBré represented GumGum in this transaction.

SAM to Sponsor LA Demo Day – Thursday, May 10, 2012

heidi — Wed, 09 May 2012 22:27:01 +0000

Come see the next class of great LA tech companies demo their startups to the LA community of entrepreneurs, investors and techies as well as a number of esteemed guests. Over 1000 people will be attending this special event.

LA Startup Demo Day, will kick off with keynote speaker Bill Gross, founder of IdeaLab. We will then showcase the latest batch of up-and-coming LA Startups. Companies will have 5 minutes to present their product which will be followed by feedback from a panel of all star judges.

The event will take place at the Fairmont Miramar Hotel in Santa Monica, CA from 1:00 – 5:00pm. Attendance is free, but you must reserve your space in order to guarantee entrance. SPACE WILL SELL OUT. LA Demo Day will be followed by Startups Uncensored #26, “How to Pitch Investors”, which does require a ticket purchase.

Event Schedule w/ Keynote Speaker and esteemed Judges :

1:00 – 1:30 Intros and Keynote Speaker Bill Gross

1:30 – 2:15 Pitch Panel 1:

Judges: Paige Craig (CEO and Co-Founder of BetterWorks), Rick Smith (Co-Founder and Managing Director of Crosscut Ventures) ,Keith Richman CEO of Break Media) , Jason Calacanis (Founder and CEO of Mahalo.com)

Companies: Bitium (http://www.bitium.com ), look.io (http://www.look.io), BarMax (http://www.getbarmax.com), Surf Air (http://www.surfair.com)

2:15 – 3:00 Pitch Panel 2:

Judges: Shawn Colo (EVP, Corporate Developement of Demand Media), Kamram Pourzanjani (Founder and CEO of Bestcovery.com), Jarl Mohn (Founding President and CEO of Liberty Digital), Jim Andelman (Co-Founder and Managing Partner of Rincon Venture Partners)

Companies: invested.in (http://platform.invested.in ), Crowdfunder (http://crowdfunder.com ), Instacanvas (http://InstaCanv.as. ), Addroid ( http://addroid.com/ )

3:00 – 3:15 Break

3:15 – 4:00 Pitch Panel 3:

Judges: Tom McInerney (Active angel investor and advisor), Jim Armstrong (Managing Director of Clearstone Venture Partners), Mike Jones (Internet executive, investor, and strategic advisor), Brian Mesic (Partner at Anthem Venture Partners)

Companies: Capsule (http://www.trycapsule.com ), Retention Science ( http://retentionscience.com/), Eventup (http://eventup.com/), Roozt (http://www.roozt.com)

4:00 – 4:45 Pitch Panel 4:

Judges: Dana Settle (Founding Partner with Greycroft LLC), Jeff Tinsley (Founder and Chairman and CEO of MyLife.com), Scott Alderton (Co-Founder Stubbs Alderton & Markiles LLP)

Companies: Penango (http://www.penango.com/), Dog Vacay (http://DogVacay.com), PayDragon ( http://www.paydragon.com ), Social Annex (http://www.socialannex.com/public/)

4:45 – 6:00 BREAK / DRINKS

6:00pm – Startups Uncensored #26 “How to Pitch Investors”

Both the LA Startups Demo Day and Startups Uncensored 26 will be hosted at the Fairmont Miramar hotel in Santa Monica. The Fairmont is graciously joining as a co-sponsor to make the event possible. They’re also currently modernizing the entire hotel to make it a crown jewel of Santa Monica. Please join us is expressing your support for the Fairmont by visiting www.FriendsoftheMiramar.com

LA Startup Demo Day is being Co-Hosted by Docstoc, Rustic Canyon, & Greycroft Partners. And our Platnium Sponsor for the event is Stubbs Alderton & Markiles, LLP

For more information, visit: http://lademoday-estw.eventbrite.com/

Stubbs Alderton & Markiles, LLP Encourages You to Attend: Caltech/MIT Enterprise Forum – “”Getting in the Game: Entrepreneurs and the Video Game Industry”

heidi — Wed, 09 May 2012 21:48:06 +0000

Raptr, Inc. Unveils ‘Raptr Rewards’: Play Games – Earn Rewards

heidi — Wed, 09 May 2012 00:47:21 +0000

SAM client Raptr, Inc. the leading community for gamers has just launched Raptr Rewards, a program to reward active gamers free videogames, downloadable content, beta codes, major discounts and more. Raptr Rewards is on track to offer over 350,000 free rewards totaling $1.3 million in value just in the first month of launch. To learn more about Raptr’s new reward program, click here.

SAM Client Paulsson, Inc. Shooting for Better Seismic Imaging by Going Deep with Fiber Optics

heidi — Wed, 09 May 2012 00:28:51 +0000

Exciting things are happening with SAM client Paulsson, Inc.! Paulsson, Inc. is working with fiber optics to develop in-well seismic imaging systems capable of surviving the extreme conditions of deep wells found both onshore and offshore. “The biggest technical challenge is building a system that can be deployed to that depth and pressure.” said Bjorn Paulsson, president of Paulsson, Inc. which is developing a deep water system with support from a group of large oil companies and a grant from the Research Partnership to Secure Energy for America (RPSEA). The goal is to create 1,000 3C receivers, comparable to high-end geophones capable of picking up a range of sounds and detecting which direction they come from. The installation could run 25,000 feet and operate in places with temperatures as high as 300C and pressures as high as 30,000 psi. To read more on Paulsson, Inc.’s project, click here.

SAM Client Cross Campus Merges with upStart.LA

heidi — Thu, 03 May 2012 21:33:08 +0000

Announced in today’s socalTECH.com:

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Los Angeles business accelerator program upStart.LA, one of numerous startup acceleration and incubation efforts to start in the last year in Southern California, is merging with a startup in Santa Monica, Cross Campus. According to a note to supporters form upStart.LA founder Dan Dato, the accelerator has merged with Cross Campus, a yet-to-be launched startup building a “collaborative workspace and education platform” in Santa Monica. Dato said the merged group has closed a first round of funding, signed a lease for a property at 820 Broadway in Santa Monica, and will be opening in the summer. Cross Campus was founded by Ronen Olshansky and others. Dato said Cross Campus is looking to build a membership-based community that tries to capture some of the “key elements of the college campus”, and that the company is “not an accelerator” and “not a co-working space,” and will not be making investments in its members.

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SAM attorney Susan Wong represented Cross Campus in the transaction.

SAM Partner Greg Akselrud to be Featured Panelist at Digital Hollywood Spring 2012

heidi — Mon, 30 Apr 2012 18:54:42 +0000

Partner Greg Akselrud will be a featured speaker at Digital Hollywood Spring 2012 on Tuesday, May 1st at 10:45am at the Ritz Carlton Hotel in Marina del Rey, CA. Greg will be on a panel discussing “Investment, Funding Strategies and Deal Flow: A Primer for Content and Technology Companies.” To register for the event, click here.