Securities Crowdfunding for Intermediaries (Series: Crowdfunding)

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Practical and entertaining education for
attorneys, accountants, business owners
and executives, and investors.
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DISCLAIMER
The material in this webinar is for informational purposes only. It should not be
considered legal, financial or other professional advice. You should consult with an
attorney or other appropriate professional to determine what may be best for your
individual needs. While Financial Poise™ takes reasonable steps to ensure the information
it publishes is accurate, Financial Poise™ makes no guaranty in this regard.
About this PowerPoint: if you are looking at this PowerPoint without the benefit of
listening to the conversation that surrounded it then you are doing yourself a disservice.
This PowerPoint was prepared in contemplation of being viewed in conjunction with
listening to a one hour webinar on the topic
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MEET THE FACULTY
Moderator:
Jordan Fishfeld – CFX Markets
Panelists:
Mark Roderick – Flaster Greenberg P.C.
Joy Schoffler – Strategy Consultant Working with Investment Firms
Andrew Stephenson – CrowdCheck, Inc.
Samson Williams – Axes and Eggs/University of New Hampshire School of
Law/Columbia University
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ABOUT THIS WEBINAR:
Securities Crowdfuning for Intermediaries
This webinar address crowdfunding portals and intermediaries. This episode begins with a
basic overview of the various methods of crowdfunding, from donation and rewards based,
to intra-state equity, debt, and finally securities based crowdfunding under Titles II, III
and IV of the JOBS Act. Once those differences are understood, the webinar focuses on the
need for intermediaries, the role that they can and sometimes, must, play, followed by a
discussion on how the market has matured and where we see the market going in the
online capital space. This webinar also discusses the risks and future of these
intermediaries with the advent of the ICO and token distribution events.
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ABOUT THIS SERIES:
Crowdfunding 2019
Since the passage of the Securities Act of 1933 and the Exchange Act of 1934, no regulatory change
has had such an impact on the capital markets and flow of capital for investors and entrepreneurs
alike as the JOBS Act. Originally intended to encourage the funding of small businesses, and
passed under the Obama Administration, Title III of the Act, or the CROWDFUND Act, has become
a major source of opportunity and stress. This Series explores the numerous titles of the JOBS Act,
expanding from the legal definition of crowdfunding, meaning only Title III, to the more common
use, meaning capital raising by public solicitation. This includes components of Title II, Title III and
Title IV. This webinar spends little time discussing the legal nuances, and focuses more on the
practical application and use cases, along with the opportunities and pitfalls of the new legislation.
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EPISODES IN THIS SERIES
5/7/19 Episode #1:
Crowdfunding from the Investor's Perspective
6/4/19 Episode #2:
Crowdfunding from the Start-Up's Perspective
7/16/19 Episode #3:
Securities Crowdfunding for Intermediaries
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Dates shown are premiere dates.
All webinars will be available
On Demand approximately 4 weeks
after they premiere.

Episode #3:
Securities Crowdfunding for
Intermediaries
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CROWDFUNDING TYPES
• Donation
• For Charity
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• Rewards
• For cool
ideas
• Investment
• To make
money

INVESTMENT CROWDFUNDING
THE JOBS ACT: (“JUMPSTART OUR BUSINESS STARTUPS”) was
signed into law on April 12, 2012 with the purpose of increasing
American job creation and economic growth by improving access to
capital, particularly for smaller, growing companies.
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INVESTMENT CROWDFUNDING (cont’d)
Split into three main funding sections:
• Title II: General solicitation in private offerings under Rule 506 of
Regulation D
• Title III: Equity Crowdfunding
• Title IV: “Regulation A-Plus
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THE PARTIES INVOLVED
• Sponsor/Issuer
– Group looking to raise money for some project
• Investor/funder
– The person looking to give/invest her money into a specific
project, either with an expectation of return or for an altruistic
reason
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THE PARTIES INVOLVED (cont’d)
• Regulator
– The organization and persons tasked with the responsibility to
protect the public from inappropriate activity and predatory
practices
• Intermediary
– Group tasked with connecting all parties to ensure a smooth
consumer process
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INTERMEDIARIES: OUR FOCUS
• Regulated
– Funding Portal
– Broker-Dealer
• Business benefit
– User experience
– Fee generating
– opportunistic
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REGULATED INTERMEDIARIES
• Whether a broker-dealer or funding portal, all crowdfunding intermediaries are required to,
among other things:
• Provide investors with educational materials about the general risks of investing and
specifics about the crowdfunding offering, as well as with other information that could
help the prospective investor decide whether to participate in the offering;
• Confirm investors have reviewed the educational materials and understand the
investment risks. Investments can only be accepted once an investor affirms their
understanding of the risk of loss and has opened an account;
• Make information about the issuer and offering available to investors and prospective
investors;
• Provide communication channels on its platform for investors and the issuer to exchange
comments about the offering (In the case of a funding portal, the intermediary is
generally not allowed to participate in the communication channel);
Source: StartupBlog.com
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REGULATED INTERMEDIARIES (cont’d)
• Make available on its platform information that the issuer is required to disclose to
the public. This must be posted at least 21 days before securities are sold and
remain available throughout the offering period;
• Take certain measures to reduce the risk of fraud, including having a reasonable
basis for believing that a company complies with Regulation Crowdfunding, and
implement written policies designed to ensure compliance with federal securities
laws;
• Have a reasonable basis for believing an investor complies with the investment
limitations;
• Disclose to investors the compensation the intermediary receives; and
• Maintain certain records relating to its business for at least five years.
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REGULATED INTERMEDIARIES (cont’d)
• Under Regulation Crowdfunding, intermediaries are prohibited from:
• Providing access to their platforms to companies they have a reasonable basis for
believing have the potential for fraud or other investor protection concerns. To satisfy
that requirement, an intermediary must, at a minimum, perform a background check on
each issuer, its officers and directors;
• Having a financial interest in a company that is offering or selling securities on its
platform, unless the intermediary receives the financial interest as compensation for its
services;
• Compensating someone for providing the intermediary with personally identifiable
information of any investor or potential investor.
• Regulation Crowdfunding also prohibits anyone subject to a statutory disqualification, as
defined in Exchange Act Section 3(a)(39), from acting as in intermediary or being
associated with one.
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FUNDING PORTALS
A funding portal is defined as a crowdfunding intermediary that does not:
(1)offer investment advice or recommendations.
(2)Solicit purchases, sales, or offers to buy securities offered or displayed on
its website or portal.
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FUNDING PORTALS (cont’d)
(3) Compensate employees, agents, or others persons for such solicitation or
based on the sale of securities displayed or referenced on its website or portal.
(4)Hold, manage, possess, or otherwise handle investor funds or securities.
(5) Engage in such other activities as the SEC, by rule, determines appropriate.
*https://www.equitynet.com/crowdfunding-terminology/funding-portal
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BROKER-DEALERS
Section 3(a)(4)(A) of the Act generally defines a "broker" broadly as any
person engaged in the business of effecting transactions in securities
for the account of others.
Unlike a broker, who acts as agent, a dealer acts as principal. Section
3(a)(5)(A) of the Act generally defines a "dealer" as:any person engaged
in the business of buying and selling securities for his own account,
through a broker or otherwise.
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NON-REGULATED INTERMEDIARIES
Entities that are not classified as a broker-dealer or funding portal, can be non-regulated
intermediaries. Specifically, these entities must only act as a listing portal where anyone
can list deals for a marketing fee, unrelated to the success of the capital raise.
Furthermore, unregulated intermediaries include any platform raising funds without a
security involved. This includes most, if not all, donation and rewards based platforms.
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ICO MARKET : A PRIMER
The Initial Coin Market (ICO) is a path of funding using tokens and coins created by the
proliferation of blockchain technology. These tokens are used as a tool to either access the
underlying platform or simply as a replacement of a physical security. Those securities,
called Security Tokens, vary little from how traditional securities function but possess a
future power of liquidity given its technological origin that can change how investments
interact with the financial markets.
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HOW INTERMEDIARIES PLAY A ROLE
IN ICOS
While paradoxical, even a decentralized asset like blockchain, can benefit from the
entrance and support of intermediaries.
Intermediaries in Crypto can:
1) Inform and support issuers to ensure a properly regulated offering
2) Market assets that they deem promising, and collect fees as a broker-dealer
3) Create a strong and beneficial user experience, as direct access to wallets can be
challenging for those not technologically capable.
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WHAT IS IN STORE FOR THE FUTURE
?
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ABOUT THE FACULTY
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Jordan Fishfeld – Jfishfeld@gmail.com
Jordan is the co-founder of CFX Markets, an online trading platform for non-public investments that is
transforming how people view and hold alternative asset positions. CFX Markets is venture-backed with
offices in Chicago, New York and California.
As an early innovator in the crowdfunding space, Jordan assisted on the rule development of many online
capital and crowdfunding rules in a number of different states and federally. Jordan is also the elected
Treasurer of the Crowdfunding Professional Association (CfPA), and continues to advocate and educate on
behalf of the crowdfunding industry.
Additionally, Jordan is a board member of the young professional real estate division of the Jewish United
Fund and a Board Member of UpStart, a San Fransisco based accelerator focused on Jewish engagement and
innovation.
As a result of Jordan’s passion for working with the Jewish Community, he was also named by Oy Chicago and
the Young Leadership Division of the JUF as one of Jewish Community’s 36 under 36.
Prior to that, Jordan worked as a finance attorney for Katten Muchin Rosenman, LLP, where he assisted on
more than $1 billion worth of syndicated loan transactions.
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Mark Roderick – Mark.Roderick@flastergreenberg.com
Markley S. Roderick concentrates his practice on the representation of entrepreneurs and their
businesses. He represents companies across a wide range of industries, including technology, real estate,
and healthcare. Expanding on his in-depth knowledge of capital raising and securities law, Mr. Roderick
is spearheading Flaster Greenberg’s Crowdfunding Practice. He also is a member of the firm’s Mergers
and Acquisitions, Business and Corporate, Taxation and Healthcare Groups. Mr. Roderick has more than
25 years of experience representing individuals and businesses in a wide variety of transactions. Mr.
Roderick writes and lectures frequently for professional groups. Recent lectures have covered raising
money from investors, franchising laws, and business contracts. He also maintains a Crowdfunding blog,
which contains news, updates and links to important information pertaining to the JOBS Act and how
Crowdfunding may affect your business. For more information, follow Mr. Roderick on twitter
@CrowdfundAttnyor visit www.crowdfundattny.com. Mr. Roderick also developed and moderates a
seminar series for entrepreneurs co-sponsored by the Rutgers-Camden Business Incubator, the
Burlington County College High Technology Small Business Incubator, and the Rutgers-Camden Small
Business Development Center. In this series, panelists guide the entrepreneur through key legal aspects
of business development and growth.
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Joy Schoffler – joy@ideationhq.com
Joy is an award winning global brand strategist to business, government and high profile individuals. She is an
expert at helping financial brands accelerate growth by building systems and messaging to attract and convert
customers, investors and key-stakeholders.
She started and sold one of the fastest growing PR firms in America, Leverage PR to NY based Caliber
Corporate Advisers. At Leverage, Joy represented numerous financial services companies including dozens of
crowdfunding related companies, hedge funds, real estate investment firms and financial technology firms
across a number of verticals. Core verticals included: banking, payments, accounting, cyber security,
investment tech, regulation technology, and lending among others.
She additionally represented brands like SXSW, The Economic Ministries of Japan and Brazil in addition to a
number of high profile individuals.
Joy additionally ran media and events at the White House, US Capitol, UN, a Shark Tank casting call and a
Mark Cuban event among others. A FinTech leader, Joy represented dozens of conferences including; Finovate
and LendIt and worked across all FinTech verticals.
To read more, go to https://www.financialpoise.com/financialpoisewebinars/faculty/joy-schoffler/
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Andrew Stephenson –
andrewstephenson@crowdcheck.com
Andrew D. Stephenson, Chief Product Officer for CrowdCheck and Partner with CrowdCheck Law,
is an entrepreneurial attorney focused on assisting small and early stage businesses with corporate
governance and securities law related matters. Prior to joining CrowdCheck, Andrew was involved
with evaluating internal company communications and reports as part of complex civil litigation
matters. Andrew has also worked for the United States Congress, handling a wide range of policy
areas.
Andrew received his B.A. from Claremont McKenna College and graduated, cum laude, from the
University of California, Hastings College of the Law. Andrew is a member of the California and
District of Columbia bars.
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Professor Samson Williams – samson@axesandeggs.com
Samson is a classically trained anthropologist, finance and public health expert who advises
Fortune 100 companies, Executives and startups in Dubai, Washington, DC and Dublin,
Ireland. Samson’s focus is helping firms understand the latest trends in fintech, alternative
investments, blockchain, AI, health and digital transformation, so that they can make strategic
and profitable decisions for their bottom lines. Samson’s specialty is explaining emerging
technology and finance in plain English to investors, government officials, small children and
c-suite executives. Additionally, Samson successfully applies the principles of anthropology to
overcome business’ biggest challenge to profitability in health, finance, technology adoption
and organizational change management – humans.
Follow Samson on Twitter/Instagram @HustleFundBaby or reach out to him on LinkedIn to
follow the latest insights in his academic and market research
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IMPORTANT NOTE: The material in this presentation is for general educational purposes only. It has been prepared primarily
for attorneys and accountants for use in the pursuit of their continuing legal education and continuing professional education.
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ABOUT FINANCIAL POISE
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audiences.
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