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December 6, 2012

REGULATORY ACTIVITY

JUMPSTART OUR BUSINESS STARTUPS (JOBS) ACT-NASAA Task Force Begins Multijurisdictional Effort to Monitor Spike in Crowdfunding on the Internet

By Jay Fishman, J.D.

A task force of state and provincial securities regulators created by the North American Securities Administrators Association (NASAA) to monitor crowdfunding and other Internet offerings began a multijurisdictional effort to scan online offering platforms for fraud, upon discovering a sharp increase in crowdfunding's presence on the Internet. The task force is being trained to use an online data mining tool developed by the New Brunswick Securities Commission to identify potentially fraudulent websites, and is working with NASAA's Investor Education Section to develop crowdfunding awareness programs for investors. The task force, when authorized, will coordinate investigations into online or crowdfunded capital formation fraud.

NASAA created the task force to lead the recent multijurisdictional effort on finding, throughout 2012, a spike in the number of websites whose domain names contain the word "crowdfunding." According to NASAA, the spikes are occurring because of soon-to-be-adopted rules from the Jumpstart Our Business Startups (JOBS) Act, permitting small businesses and entrepreneurs to receive public donations for investments on social networking websites. NASAA's President and Arkansas Securities Commissioner, Heath Abshure, said the fraud-identifying efforts of the task force are necessary because "investors soon can expect to be inundated with crowdfunding pitches, legitimate or otherwise."

JOBSAct

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