As crowdfunding gains in popularity, securities counsel have been quick to raise the caution flag, but unless they get on board with the new fundraising vehicle, they risk losing clients to attorneys more willing to navigate the rules and regulations of this new space.
Since starting Miami-based crowdfunding platform EarlyShares, Heather Lopes says she has seen at least three clients cut ties with their securities attorneys and find other counsel more willing to take advantage of the U.S. Securities and Exchange Commission's new guidelines in Rule 506(c), which were implemented at the end of 2013. They allow for the public and general marketing of equity investment opportunities and open up the pool of potential investors far beyond any personal network.
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“What's a little bit different is you have to decide whether you want to have oodles of multiple private shareholders,” DiStefano said. “That's the kind of thing I drill down with my clients.”