RegD SEC Reporting Obligations

RegD SEC reporting obligations is a theme that causes a lot of doubts, even concerns, among people who are thinking about raising capital. The compliance details required by Securities and Exchange Commission (SEC) have a lot of particularities, which demands attention of all potential issuers.

Regulation D (Reg D) offerings are exempt from the full SEC registration requirements but still require compliance with certain reporting obligations. The reporting requirements under Regulation D vary depending on the specific exemption used for the offering.

 

RegD SEC Reporting Obligations

In this short guide, we will explain practical details regarding SEC reporting for RegD.

Here’s an overview:

 

Rule 504 Offering (Regulation D, Rule 504):
Companies conducting offerings under Rule 504 are generally exempt from SEC registration requirements. However, there are no specific ongoing reporting requirements mandated by the SEC for Rule 504 offerings.

Rule 505 Offering (Regulation D, Rule 505):
Companies utilizing Rule 505 for their Reg D offerings are allowed to raise up to $5 million within a 12-month period.

While Rule 505 itself doesn’t impose ongoing reporting obligations to the SEC, individual states might have their reporting requirements for Rule 505 offerings.

Rule 506(b) Offering (Regulation D, Rule 506(b)):
Under Rule 506(b), companies can raise an unlimited amount of capital from an unlimited number of accredited investors and up to 35 non-accredited but sophisticated investors.

There are no specific ongoing reporting requirements to the SEC for Rule 506(b) offerings. However, if non-accredited investors are involved, some level of disclosure may be required to satisfy anti-fraud provisions.

Rule 506(c) Offering (Regulation D, Rule 506(c)):
Rule 506(c) allows companies to conduct offerings where they can generally solicit and advertise their offerings to the public but are limited to accepting investments only from accredited investors.

There are no specific ongoing reporting requirements to the SEC for Rule 506(c) offerings.

However, companies might need to file a Form D notice with the SEC within 15 days of the first sale of securities.

Take note!

While Regulation D exemptions typically do not impose explicit ongoing reporting requirements to the SEC, companies that conduct Reg D offerings are subject to anti-fraud provisions and should provide investors with all material information necessary to make an informed investment decision.

Additionally, states may have their reporting requirements for offerings made under Regulation D, so companies should consider state-specific regulations when conducting these offerings.

It’s important for companies utilizing Regulation D exemptions to consult legal and financial professionals to understand the specific reporting obligations, if any, and to ensure compliance with all relevant securities laws and regulations.

What is an Escrow Provider’s Role in RegA+?

An escrow provider is a neutral party that handles financial transactions between two or more parties. They are often used in the securities industry to ensure that all parties involved in trade receive their agreed-upon share of the investment. Escrow providers in RegA+ play an essential role, securely holding funds investors have paid until those investors can be verified. This article will explain what an escrow provider is, their importance in RegA+, and some of the benefits they offer companies.

 

An escrow provider is a financial institution or company that holds funds on behalf of two other parties until their agreement has been met. In the context of securities offerings, escrow providers are often used in Regulation A+ transactions to hold funds invested by investors until the broker-dealer has completed their due diligence on those investors. This due diligence includes verifying the investor’s identity and ensuring that the investment is legitimate.

 

The escrow provider plays an important role in protecting both the investor and issuer in a Reg A+ transaction. Holding the funds until the completion of the broker-dealer’s due diligence protects the issuer from fraud and also ensures that the buyer receives their money back if the deal falls through. 

 

Escrow providers help to make sure that all of the necessary steps are taken to complete the transaction and that everyone involved is satisfied with the outcome. Part of this process includes making sure that the correct paperwork is filed and that all of the right people have signed off on it and everyone involved is legitimate. 

 

Beyond using an escrow provider to ensure that your Reg A+ transactions are completed smoothly and efficiently, it is also required for companies utilizing equity crowdfunding. Therefore, choosing an experienced escrow provider can provide valuable assistance and peace of mind throughout the process. 

 

Escrow providers play an essential role in Reg A+ transactions by holding and managing the funds until the necessary due diligence has been completed. They also ensure that all parties involved in the transaction comply with securities laws. These factors make escrow providers in RegA+ a necessary component of a successful offering. 

What is a CIK Number?

Recently, we received a question from an issuer who asked what a CIK number is. If you have ever filed a form with the Securities and Exchange Commission (SEC), you have probably come across the term Central Index Key (CIK). The CIK number is a unique identifier used by the SEC’s computer systems to distinguish corporations, funds, and individuals who have filed disclosures with the SEC. 

 

A CIK number is a 10-digit code that is an essential part of the SEC’s EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system, which allows the SEC to collect, analyze and distribute financial information about companies and individuals. CIK numbers are assigned by the SEC and must be included in all filings made with the Commission. This allows the SEC’s computer system to quickly and efficiently identify companies and individuals and analyze their filings. It also helps to ensure that filings made by a particular company or individual are accurate and complete.

 

The easiest way to find a company’s CIK number is by using the SEC’s online database. You can search for CIK numbers using keywords such as the company name or ticker symbol. The search results will provide a list of entities matching your search criteria and their CIK numbers. Keep in mind, the entity’s name may be listed differently than expected.

 

It is also important to note that not all companies that offer stock for sale are required to file disclosures with the SEC, such as some companies raising capital through Regulation D. Small companies may be granted exemptions from regular SEC reporting and, therefore, may not have a CIK number. However, a CIK number is mandatory for companies that file disclosures.

 

CIK numbers are essential for the SEC to monitor and regulate the financial markets. By requiring companies and individuals to use CIK numbers when filing disclosures, the SEC can efficiently identify companies and detect potential fraud or other illegal activities to take appropriate action.

 

CIK numbers are also important for investors and other stakeholders. By providing a unique identifier for each company and individual, CIK numbers allow stakeholders to easily access relevant filings, financial data, and other information. This makes it easier for investors to make informed decisions and for regulators to enforce the rules and regulations that govern the financial markets.

 

In conclusion, CIK numbers are a critical component of the SEC’s regulatory framework. They are used to track and monitor companies and individuals that file disclosures with the SEC, and they enable investors and other stakeholders to access important financial data and other information. 

 

We believe that education is an essential part of the capital-raising process, so don’t hesitate to reach out to our team with any other questions that could help you along your capital-raising journey.

Veni, Vidi, Verify

More than two millennia ago, Julius Caesar said the famous phrase, “Veni, Vidi, Vici”, triumphant in battle. This translates to, “I came, I saw, I conquered.” While the Roman Empire has long since fallen, these powerful words continue to ring true today – only in a different context. When it comes to investment opportunities, there is a simple way to “conquer” the investment process: Veni, Vidi, Verify.


I Came: The Search for Investment Opportunites 

 

With Regulation CF or RegA+, investors have more investment opportunities available to them than ever. Many of these investment opportunities are in startups that have a promising future, ranging from collectibles, MedTech, real estate, and many other growing industries. This is the time to start thinking about how you can use these opportunities to grow your investment portfolio while aligning your risk tolerance with your investing goals.

 

I Saw: Seeking Legitimate Investments

 

The abundance of options available to investors can be considered both a blessing and a curse. Despite the many opportunities available, you must ensure that the company is legitimate and the way you invest. For issuers, the same could be said about making certain investors are who they say they are to protect your company. When investing, it is good to analyze the risk versus the reward of a particular investment. You want to ensure that everything is above board in terms of your investment and there are no underlying additional risks. 

 

I Verified: Confidence Through Verification

 

Verification allows investors and issuers alike to verify the information provided by all parties to help confirm the transaction is legitimate and complies with regulatory requirements. Verification can ensure the quality of an investment with the assistance of data and information, such as:

 

  • ID verification
  • KYC and AML
  • Regulatory compliance
  • Transaction information
  • Company information and history

 

This gives investors the peace of mind to pursue assets knowing that they are making an informed decision and letting issuers know that investors are who they say they are. Additionally, tools such as the KoreID mobile app enhances the process of verification during the investment process. With KoreID, investors can securely manage their investments and personal information to meet KYC requirements. 

Veni, Vidi, Verify helps both issuers and investors ensure that they are making secure investments. Ultimately, verification and adherence to securities regulations create trust between investors and issuers during the investment process.

What is Phishing?

No one thinks they’ll fall victim to a cybercrime, but in reality, you’ve likely come across a suspicious email that could be trying to steal login credentials, financial information, or your identity or install dangerous computer viruses. Maybe you’ve received an email that claims to be from Netflix or Amazon, requesting your password, account email, payment information, or other personal information and directing you to an unfamiliar website. These characteristics are the hallmarks of a classic phishing attack, which can lead to identity theft, credit card fraud, ransomware attacks, and more. 

 

Where Did Phishing Come From?

 

The history of phishing dates back to the mid-1990s, when groups of hackers posed as AOL employees and used the instant messaging platform to steal passwords and login credentials. The purpose of these attacks was to use the hijacked accounts to access the internet, rather than pay for access once the 30-day free trial of AOL expired. These hackers were known as “phreaks”, a group of individuals who had a keen interest in studying telecommunication systems. The name “phishing” was used to link these scams to this community.

 

In the early 2000s, hackers began to branch out past AOL accounts to target financial systems to steal credit card information and passwords. Since then, the prevalence of phishing scams has grown exponentially, with 36% of data breaches involving a phishing attack, according to a Verizon report. Between 2021 and 2022 alone, the number of malicious phishing emails grew by 569%, according to cybersecurity company Cofense.

 

How Phishing Works

 

In modern phishing attacks, many hackers use spoofing to disguise an email address, website, phone number, or sender name in the hopes that it will appear legitimate. It could be as simple as changing a number, letter, or symbol so that the URL a hacker is using, without close inspection, is coming from a legitimate source. This will often trick victims into disclosing sensitive information like passwords or credit card numbers, which are then stolen by the hackers. 

 

Protecting Yourself

 

Luckily, there are easy steps to protect yourself against phishing attacks. According to the FBI, companies generally will not contact you asking for your username or password. If you receive an email, text, or phone call requesting this information, that should be a significant red flag. If you receive an unsolicited email with a link, avoid clicking on it. Instead, carefully examine the sender’s name, email address, spelling, and other details about the correspondence to see if there are slight inaccuracies that could point to it being a phishing scam. And, if an email asks you to download something or open an attachment, do not do so unless you can verify that the sender and attachment are legitimate. Also, be wary of the information you share online. Details like birthdays, pet names, schools you attended, and other personal details can be used to guess passwords. 

 

The Importance of Verification

 

Ultimately, the confirmation of someone’s identity can help to avoid potential scams. This can be achieved in the private capital markets by complying with securities regulations. For investors, due diligence and careful research of investment opportunities can highlight potential red flags that could be a telling sign of something too good to be true. At the same time, verifying the identity of a company raising money can provide assurance that it is a legitimate investment opportunity. For issuers, identity verification like AML and KYC confirm that investors are who they claim to be. 

 

Being on the lookout for phishing can help protect your identity and financial information from hackers. Understanding what these scams are and how they work is one of the best defenses available. Stay tuned for the next article in this series, which will shed light on a different type of scam. If you have any questions or topics you’d like to see discussed in more detail, please reach out and share your ideas with us!

What is an Escrow Provider?

If you’ve bought a home, you’ve likely heard the term escrow. In the homebuying process, escrow can be used to hold a good faith deposit while the contract is being finalized. It can also be used after the home is purchased to pay for property taxes, homeowners insurance, or mortgage insurance. In these instances, money held in escrow is managed by an independent, third-party intermediary. However, escrow is also common during the process of investing in a company, where the escrow provider takes custody of funds and assets until specific transaction conditions are met. But what exactly is the role of an escrow provider in a transaction? What responsibilities do they have? And when should they be utilized? 

 

What is an Escrow Provider?

 

An escrow provider is an independent third-party intermediary which ensures that a transaction is completed in accordance with the rules of the agreement. An escrow provider collects, holds, and distributes funds on behalf of the individuals involved in a transaction. The help of certified escrow providers ensures that both parties meet their obligations and bring confidence to complete a transaction reliably. 

 

In many cases, the buyer and seller agree to use an escrow provider for several advantages, such as:

 

  • Mitigating the risk of nonpayment or fraud
  • Ensuring that all funds are securely handled
  • Being an impartial third party to the transaction

 

The process when utilizing an escrow provider generally includes:

 

  • Creating a contract outlining the obligations of the buyer and seller
  • Depositing funds into an escrow account
  • Ensuring that all conditions of the agreement are met before releasing funds

 

At the same time, technology can play an important role in the escrow process. For example, smart contracts that leverage blockchain technology can be programmed to automatically transfer assets between two parties once the conditions of the contract have been met. This can automate some of the escrow process, which can help to streamline the escrow process.

 

JOBS Act and Escrow

 

The Jumpstart Our Business Startups (JOBS) Act has since become a major factor in creating a secure capital-raising environment in the private capital markets. To raise capital, issuers must follow securities regulations to ensure compliance in the capital-raising process. This provides an additional layer of protection for investors and startups raising capital.

 

An essential component of compliance includes finding an escrow provider to administer transactions. This ensures that all funds are handled securely and that a third-party intermediary manages the transaction. Putting investors and issuers at ease by bringing peace of mind to the transaction. 

 

Escrow providers are essential for any type of business transaction where an impartial third-party intermediary is involved. With an increase in accredited and nonaccredited investors alike being involved in the private capital markets thanks to the JOBS Act, it is crucial to ensure that one is involved in the capital raising process. Whether you are an investor or issuer, using an escrow provider guarantees all funds are handled correctly while avoiding financial risk or fraud. 

Form C-AR filing time again!

Hi everyone; a reminder that we are just over a month away from the deadline to file Form C-AR by May 1.*

We wanted to flag some issues:

  • If you sold any securities under your Form C, even if you didn’t sell them until this year, and even if you didn’t sell them until April 30, a Form C-AR with 2022 financials is due by May 1.
  • Even if your current Form C already includes 2022 financial statements, a Form C-AR is due by May 1.
  • If you do not have an open offering or otherwise have audited or reviewed statements available, the financial statements do not have to be audited or reviewed, but they do need to be in US GAAP format. This means balance sheet (as at December 31, 2021 and 2022), P&L, cash flow and changes in equity (for 2021 and 2022) as well as footnotes.
  • QuickBooks is not US GAAP.
  • If you used a “crowdfunding special purpose vehicle, it is an “issuer” under Rule 202 (the rule that says you have to file annual reports) and must file its own financial statements too. (See General Instructions to Form C.)

As a reminder:  if with this filing you are eligible to exit the Regulation CF ongoing reporting regime, remember, you must file your Form C-TR within 5 business days of the due date to notify investors, otherwise you may get to do this all over again next year!

As always, this isn’t legal advice, but feel free to call us if you need advice.

*If you do not have a fiscal year ending on December 31, your Form C-AR is due 120 after the end of your fiscal year, and dates above should be adjusted accordingly.


This article was originally written by our KorePartners at CrowdCheck. You can view the original article here.

5 Things You Need to Know About Transfer Agents

When a company issues securities, it is vital to keep the official record of ownership and distribution accurate and up-to-date at all times. This process is managed by transfer agents who in addition to assuming responsibility for maintaining accurate records of security transactions, can also handle shareholder inquiries, distribute shareholder materials, and more. In this blog post, we will discuss the five critical things that companies need to know about transfer agents before embarking on their next capital raise.

 

1. Protecting Issuers and Investors

 

Transfer agents protect issuers and investors by ensuring that the issuance of securities maintains a high degree of accuracy and reliability, and is consistent with the applicable regulations, thereby protecting both the issuer and the investor from the risk of disputes and expensive litigation. Transfer agents play a critical role in maintaining the integrity of the security issuance process, closely monitoring any changes in ownership or other company-specific details. This helps to prevent fraudulent activities such as double ownership or over-issuance of securities.

 

2. Issuing and Canceling Certificates

 

Another crucial function of transfer agents is to issue or cancel certificates reflecting shareholder ownership in the company, to ensure that the shareholders receive accurate documentation of their investment. The certificates are tangible evidence that shareholders own securities in the company and that they have the right to vote or receive dividends. Transfer agents must also cancel and decommission certificates to reflect trades or company-specific events such as stock splits, mergers, or acquisitions. Canceling or decommissioning certificates is a vital task in maintaining a current and accurate representation of who owns what within the company.

 

3. Managing the Cap Table

 

Transfer agents play a crucial role in managing the cap table. The cap table is the official record of the ownership structure of the company, including the number of shares held and who holds them. It is essential to manage the cap table effectively to avoid conflicts, confusion, or discrepancies among shareholders. The transfer agent ensures that the cap table stays up to date with any changes that may occur due to equity issuances or mergers and acquisition activity involving the company. The effectiveness of the cap table management is critical for companies raising capital or going through mergers and acquisitions, for helping investors conduct their own due diligence, and for tracking the company’s overall value and growth.

 

4. Legal Compliance

 

Another significant responsibility of transfer agents is ensuring the company’s compliance with specific securities laws and regulations. The transfer agent makes sure that the company is aware of and adhering to the legislative guidelines and rules governing the issuance and transfer of securities. Transfer agents must comply with both federal and state regulations, making this a complex task. Companies need to work closely with their transfer agents to ensure they are clear on aspects of the legal requirements that affect their business. Navigating the regulatory landscape can be daunting, but a transfer agent can help make it smoother for companies.

 

5. Investor Relations

Finally, transfer agents are essential for providing service to shareholders. Often, they are the first point of contact when shareholders have questions, concerns, or problems that require resolution. They help to answer any inquiries shareholders may have and maintain a clear line of communication. Excellent customer service is key to maintaining a positive relationship with shareholders. Shareholders who feel valued are more likely to remain invested in the company and can become valuable brand ambassadors. This, in turn, can lead to more significant investments in the company, improving overall shareholder value.

A transfer agent plays a critical role in ensuring that securities transactions are processed accurately and reliably, protecting the interests of the issuer and the investor. Using an experienced and knowledgeable transfer agent has many valuable benefits for companies. They provide companies with a comprehensive solution for managing securities issuances, maintaining shareholder relationships, and navigating the complex regulatory landscape. Transfer agents are an essential part of the securities industry, and companies who work with them are better positioned to succeed.

5 Tips for Frictionless Capital Raising

Raising capital can be a tricky process. Fortunately, with the JOBS Act and its exemptions from SEC registration under RegA+, RegCF, or RegD, entrepreneurs can now access capital raising 24/7/365. Here are five tips to help you make the most of this opportunity and enjoy frictionless capital raising.

Use Mobile Apps for Online Investments

Mobile apps are becoming an increasingly popular way to access capital markets and make investments online. When a company raises capital under a JOBS Act exemption, a mobile app can streamline the investment process for investors. For example, the KoreID Mobile App allows investors to manage current and pending investments and reinvest with ease. KoreID allows investors to securely manage their personal information so that they don’t have to reenter the same information each time they go to invest.

Utilize Affinity Marketing

What better way to raise capital than to leverage your existing network of customers? Customers that align with your company’s mission and values can become powerful brand ambassadors when they invest. This type of marketing also helps give potential investors a sense of trust and familiarity, which can be invaluable when it comes to securing investments. By utilizing affinity marketing, you can easily create an affinity network and unlock new capital-raising opportunities.

Seek the Crowd

Over the last year, the amount of venture capital funding has dropped significantly. Instead, online capital formation facilitated by the JOBS Act has become a powerful player in the private capital market. RegA+ and RegCF allow companies to raise capital from the general public, creating a wider pool of potential investors. And, since online capital raising is open 24/7/365, these sources of capital can be a valuable alternative to traditional funding routes.

Have a Plan and Tailor Your Pitch

Before you even consider approaching potential investors, you should always have an airtight business plan in place. This includes your stated objectives, financial projections, and any other details that provide an in-depth look into your venture. Once you’ve mapped out the specifics of your venture, it’s time to start crafting a tailored pitch that resonates with potential investors. Creating a compelling presentation with the right balance of facts, figures, and storytelling can help draw investors in and establish trust. Think about the investors you are pitching to and tailor your pitch accordingly. Are they venture capitalists and angel investors? Or are you targeting family and friends or seeking equity crowdfunding? Each type of investor has different requirements, so it’s key to understand who you are pitching to and adjust your strategy accordingly. Regardless of who you’re targeting, it’s vital that you fully understand your business plan, because investors will ask you questions that a memorized sales pitch might not answer adequately. By doing this, you can ensure that the capital-raising process is as seamless as possible.

Prioritize Compliance

When raising capital, adhering to securities regulations is essential for success. While there are many components to compliance, using a broker-dealer is one of the first things that any company should consider when raising capital. Broker-dealers can also help you navigate the complexities of securities regulations. By selecting an experienced and reliable broker-dealer, you’ll have peace of mind knowing that the process is compliant and secure. With these raises sometimes having thousands of investors on a cap table, you want to be sure that your investors are managed properly and that your raise is in compliance with the law.

Raising capital for your venture doesn’t have to be a daunting task. By following these five tips for frictionless capital raising, you can make the process as smooth as possible so you can be well on your way to securing the funds needed for growth. 

 

Who Does Due Diligence on Companies Using RegCF?

When it comes to raising capital using Regulation Crowdfunding (RegCF), due diligence is an essential part of the process. Due diligence helps ensure that the company offering securities complies with all applicable laws and regulations and that investors are fully informed about the risks that come with investing. We are going through who does due diligence on companies using RegCF

 

Conducting Due Diligence for Reg CF

 

The responsibility for conducting due diligence on companies using RegCF lies with a variety of parties. To offer securities through a RegCF raise, companies must use an SEC and FINRA-registered Broker-Dealer or crowdfunding platform. The broker-dealer or crowdfunding platform needs to ensure that the issuer provides accurate company information and complies with securities regulations at both the federal and state levels. These parties also ensure that any investors pass KYC and AML checks to ensure they are not bad actors or other people unable to invest.

 

The issuers themselves also have responsibilities when it comes to due diligence. They must provide investors with accurate and complete information about the company, its securities offering, and the risks associated with investing. Investors also have an obligation to thoroughly review any information regarding the investment opportunity so that they can understand its potential risk and determine if it is an appropriate investment.

 

Types of Information Gathered During Due Diligence

 

When conducting due diligence on companies using RegCF, there is an information-gathering process, notably from your Form C, such as:

 

  • Business plans
  • Background checks on key officers
  • Financial statements and tax returns
  • Intellectual property registration filings
  • Proof of ownership in any subsidiaries of the company
  • Legal documents related to the business, such as contracts and bylaws

 

This information provided during the due diligence process allows investors to better understand the company and its business operations. 

 

Protecting Investors and Issuers 

 

Performing due diligence on companies using RegCF is an important part of protecting investors. It helps ensure that only qualified and legitimate businesses can raise capital. It also provides investors with the information they need to make informed decisions about their investments.

 

Due diligence is important for companies raising funds through RegCF because of the number of new-to-the-space investors. Issuers will demand their broker-dealer to complete all due dilligence. Raises can be successful and investors need to be sure of that, as well. Additionally, platforms should also have procedures in place to collect information from companies and investors before they are allowed to raise funds, such as background checks. By doing so, platforms ensure that investors are protected and companies meet all necessary criteria before raising funds.

 

Proper due diligence has clear roles: From broker-dealers and the platforms that facilitate the RegCF transactions to issuers and investors themselves. Accurate and complete information about companies using RegCF protects issuers and investors. For investors, it allows them to make better-informed decisions about their investments. For issuers, it provides an opportunity to demonstrate commitment to compliance and build credibility with investors for a successful raise.

What is Rule 145?

The Securities Act, passed in 1933, was created to protect investors following the stock market crash in 1929. It offers protection by ensuring more transparency and creating laws against fraud in the capital market. The Securities Act also requires companies to be registered with the SEC to sell securities to investors. At the same time, the SEC has introduced certain exemptions like Regulation A+ and Regulation CF, which allow private companies to raise capital without having to go through the process of SEC registration.

 

Another exemption is Rule 145, which “registered transactions in connection with reclassifications of securities, mergers or consolidations, or transfers of assets”. This is an especially important rule to be aware of for startups, as possible exit opportunities could include an acquisition. 

 

Ultimately, the rule says that if shareholders vote to accept or reject a merger proposal, it is considered an investment decision with respect to the offer of the acquiring company’s shares. When a company wants to purchase another company that has investors from previous rounds of crowdfunding, it must register its offering under the Securities Act or comply with one of its exemptions such as Regulation A, Regulation D, or Regulation CF. 

 

In addition, Rule 145 requires that all shareholders must approve the merger and receive full disclosure about the terms of the deal before they vote. Some states may also require shareholders with non-voting rights to cast their votes, as they are awarded certain inalienable voting rights in some scenarios. 

 

If the acquirer is not a public company, registration of securities is typically a costly process. However, they can utilize Reg A+ if they have an offering active that can be amended. Regulation D is typically not utilized because investors from a Reg CF raise are likely to include many nonaccredited investors. Alternatively, some companies may opt to use Regulation CF. However, this option will not work if there are already more than $5 million worth of crowdfunding investments from previous rounds. Ultimately, these considerations must be made well in advance so that all shareholders are given proper notice and have enough time to make an informed decision about whether or not to approve the merger agreement before it takes effect.

 

And in some cases, the acquiring company was unable to offer shares to crowdfunding investors, requiring them to cash out these investors. However, many investors believed in the company’s vision and were interested in the long-term progress of the company, so a cash-out can be disappointing. At the same time, a cash-out may be difficult for companies without the available funds. 

 

For companies exploring an acquisition for a potential exit after previous rounds of crowdfunding, these are some of the things that need to be taken into consideration. Just as a securities lawyer can help with initial offerings, they can also help you navigate these types of exits so you can do so compliantly. 

Online Capital Formation And Why You Have To Understand It

The JOBS Act reached its tenth anniversary in 2022. We celebrated the date with the launch of our Podcast, KoreTalkX, recently mentioned by Spotify as in the top 10% of the most shared shows globally. But the regulations that brought a lot of novelties to the capital raising process still face some misconceptions. Especially regarding Crowdfunding. We are introducing Online Capital Formation and why you have to understand it.

We do write a lot about the democratization of capital because we believe that everyone should be able to participate and share in the benefits. Whether as entrepreneurs, brand advocates, innovators, or investors (both accredited and non-accredited). What we may be missing here is that Regulation CF (RegCF) has matured over the past decade, and it is time to look at it in a more complex way.

Crowdfunding?

For many individuals, the word  “crowdfunding” still evokes Kickstarter as a Top of Mind idea. Entrepreneurs that need money to launch a product pitch their ideas online. People can contribute based on a variety of rewards listed on a website. But that is far from being a regulated entity.

RegCF helps companies turn investors into shareholders. Companies and product makers are not selling their stories anymore. They are selling their stock. And that is why we feel the word “crowdfunding” doesn’t encompass the whole idea behind it.

That is why we put together our KorePartners, like Sara Hanks (CEO/Founder of CrowdCheck) and Douglas Ruark (President of Regulation D Resources) to help us put a flag in the ground to what we believe is the new era in Crowdfunding: Online Capital Formation.

Sara Hanks, Douglas Ruark. and Oscar A Jofre, our CEO and co-founder, will join our communications coordinator Rafael Gonçalves in a webinar next Monday, on December, 19th, at 4 PM EST, to remind us all of the paths we have traveled while pointing the way forward for the Online Capital Formation idea.

Join us on LinkedIn Live or subscribe on Airmeet.

What are the Differences Between Regulations A, CF, D, and S?

When it comes to raising capital, there are various ways you can raise money from investors. And while they all have their own specific compliance requirements, they all share one common goal: to protect investors while still providing them with opportunities to invest in private companies. Let’s look at the four most popular types of equity crowdfunding; through Regulation A, CF, D, or S. 

 

Regulation A+

 

Offering size per year: Up to $75 million

Number of investors allowed: Unlimited, as long as the issuer meets certain conditions.

Type of investor allowed: Both accredited and non-accredited investors.

SEC qualification required: Reg A+ offerings must be qualified by the SEC and certain state securities regulators and must also file a “Form 1-A”. Audited financials are required for Tier II offerings.

 

This type of crowdfunding is popular because it allows companies to raise up to $75 million per year in capital and is open to accredited and non-accredited investors. Offering the ability to turn current customers into investors and brand ambassadors (like several JOBS Act regulations promote) can bring a company tremendous value and help to grow the business. A Reg A raise is excellent for companies that have a wide customer base or need to raise a large amount of capital. Compared to other regulations, Reg A+ is a bit more complex and time-consuming to implement. Yet, it still offers a great deal of potential with the ability to market the offering to a wide pool of potential investors.

 

Regulation CF

 

Offering size per year: $5 million

Number of investors allowed: Unlimited, as long as the issuer meets certain conditions.

Type of investor allowed: Both accredited and non-accredited investors

SEC qualification required: The offering must be conducted on either an SEC-registered crowdfunding platform or through a registered broker-dealer. Audited financials are required for companies looking to raise more than $1,235,000. Companies must fill out a “Form C.”

 

Compared to other regulations, Reg CF is one of the most popular due to its lower cost and ease of implementation. Regulation CF offers companies the ability to raise up to $5 million per year and allows accredited and non-accredited investors to invest in the company. Companies that need a smaller sum of capital while still leveraging the power of marketing can benefit from utilizing this type of regulation. 

 

Regulation D

 

Offering size per year: Unlimited

Number of investors allowed: 2000

Type of investor allowed: Primarily accredited investors, with non-accredited investors only allowed for 506(b) offerings.

SEC qualification required: Reg D offerings do not need to be registered with the SEC but must still meet certain filing and disclosure requirements.

 

A Reg D offering must follow either Rule 506(b) or 506(c). Both allow up to 2000 investors but differ slightly in that 506(b) offerings allow up to 35 non-accredited investors. Additionally, 506(b) offerings do not permit general solicitation. This means that companies will have to rely on their own network of investors to reach their goals. While this type of offering is more restrictive than others, it can be attractive to companies that need a smaller sum of capital and have access to a network of accredited investors. 

 

Regulation S

 

Offering size per year: Unlimited

Number of investors allowed: 2000

Type of investor allowed: Foreign (non-US) accredited and non-accredited investors

SEC approval/qualification required: Reg S offerings are not subject to SEC rules, but they must follow the securities laws in the countries issuers seek investors from.

 

An excellent complement to Reg D, Reg S allows companies to raise capital from foreign and non-U.S. investors. This regulation was made for big deals, allowing companies to reach a larger and more diverse pool of investors. Reg S is great for companies looking to raise a large amount of capital or to break into foreign markets. Issuers must be careful not to make the terms of the offerings available to US-based people.

 

Depending on the size of your offering, the number of investors you’re looking to attract, and the type of investor you want, one regulation may be better suited for your needs than another. Still, it is important to consult with a professional when making these decisions to ensure that you meet all necessary compliance requirements.

Selling Shareholders for RegA+

For many investors in the private market, one of the risks they face is the lack of a liquid market for selling shares.

Through a Reg A+ offering, however, accredited investors who purchased securities during a Reg D or Series A raise can sell a portion of their holdings, creating a powerful buy incentive.

The law allows issuers to allocate up to 30% of their Reg A+ offering to selling shareholders, and investors are under no obligation to sell stock. 

What is a Selling Shareholder?

A selling shareholder is an individual or entity that sells securities of a company in a registered offering.

The shares sold by selling shareholders are first offered to other shareholders on a pro-rata basis before being made available to the general public.

Selling shareholders are typically early investors in a company who are looking to cash out some of their investment. They may also be employees or insiders who are looking to sell a portion of their holdings.

In some cases, selling shareholders may be venture capitalists or other institutional investors who are looking to exit their investment before a company’s IPO.

Selling Shares with a Reg A+ Offering

The Reg A+ selling shareholder allowance is a valuable tool for companies seeking to raise capital from accredited investors.

For investors to sell their shares with a Reg A+ offering, the company must file an amendment to their offering circular with the SEC that includes a selling shareholders section.

The amendment must disclose the number of shares being sold and the maximum offering price. In addition, all selling shareholders must be identified in the 1A.

The Reg A+ selling shareholder allowance is a great way for companies to raise capital while letting investors potentially get a return on their initial investment.

The allowance also provides an incentive for accredited investors to participate in a Reg A+ offering, as they can receive immediate liquidity without waiting for a company to go public.

If you’re considering a Reg A+ offering, consult with your securities attorney to determine if the selling shareholder allowance is right for your company.

Celebrity Endorsements of Investment Opportunities

When it comes to investing, celebrities are just like the rest of us. They need to do their research before putting their money into anything. Unfortunately, many stars have fallen victim to investment schemes in the past without doing the proper due diligence. However, an issue that is becoming even more prevalent is celebrities who use their influence and followings to promote securities, without including the proper disclosures, to unsuspecting fans and investors.  So, with the SEC cracking down on celebrities and companies, it’s important to know what you’re getting into when dealing with an investment opportunity tied to a celebrity endorsement.

 

Celebrity Endorsement and Investment Opportunities

 

The SEC’s Office of Investor Education and Advocacy (OIEA) has warned investors not to make investment decisions based solely on celebrity endorsements. While celebrity endorsements exist for a wide variety of products and services, a celebrity endorsement does not mean that an investment is legitimate or appropriate for all investors. As the OIEA says, “It is never a good idea to make an investment decision just because someone famous says a product or service is a good investment.”

 

Celebrities can be lured into participating in a fraudulent scheme or be linked to products or services without their consent. According to the SEC, even if the endorsement and investment opportunity are genuine, the investment may not be good for you. Before investing, always do your research, including these steps:

 

  • Research the background, including registration or license status, of anyone recommending or selling an investment through the search tool on Investor.gov.
  • Learn about the company’s finances, organization, and business prospects by carefully reading any prospectus and the company’s latest financial reports, which may be available through the SEC’s EDGAR database.
  • Evaluate the investment’s potential costs and fees, risks, and benefits based on your personal investment goals, risk tolerance, investment horizon, net worth, existing investments and assets, debt, and tax considerations. 

 

Kim Kardashian and the SEC

 

The SEC’s announcement followed an investigation that found Kim Kardashian failed to disclose that she was paid $250,000 to publish a post on her Instagram account promoting EMAX tokens, a crypto asset security offered by a company called EthereumMax. The post contained a link to the EthereumMax website, which provided instructions for potential investors to purchase the tokens. Since the investigation, she has agreed to settle the charges and pay $1.26 million in cooperation. SEC Chair Gary Gensler noted that “investors are entitled to know whether the publicity of a security is unbiased,” and the SEC’s Director of Enforcement Gurbir S. Grewal added that “Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities.”

 

This case highlights the need for transparency surrounding celebrity endorsements of investments. Federal securities laws are clear that any celebrity or other individual that promotes a security must disclose the nature, source, and amount of compensation they received in exchange for the promotion. Without this type of disclosure, investors cannot make informed investment decisions. The SEC’s investigation is ongoing, and it remains to be seen if any additional action will be taken in this case. This case serves as a reminder that celebrities and influencers are not above the law. When considering any investment opportunity, it is important to do your own research and consult with a financial advisor to ensure it is right for you. Be sure to ask questions and demand transparency if you are asked to invest in a security based on a celebrity endorsement.

How Much Can I Invest in a Company with RegCF?

As Regulation Crowdfunding offerings continue to grow in popularity, more and more investors are looking to get involved. RegCF gives investors the ability to invest smaller amounts of money into early-stage companies as non-accredited investors. This is why investors put $1.1 billion into RegCF offerings in 2021 and this is predicted to double in 2022. But what exactly is Regulation Crowdfunding? And how much can you invest in a RegCF offering?

 

Why Invest in RegCF?

Reg CF allows you to invest in some of the newest and most innovative companies. This is because early-stage startups often have a difficult time accessing traditional forms of funding, such as venture capital. Other offerings have fairly large minimum investment amounts, which non-accredited investors might have trouble affording (since this prime directive of investing is never to invest more than you can afford to lose). This traditional approach to capital raising meant that only wealthy investors could afford to participate.

 

Since RegCF is specifically set up around the crowdfunding paradigm, the minimum investment amount is more affordable to more people. This is why in 2021 over 540,000 investors put their money into over 1,500 Reg CF offerings, double the number of offerings in 2019 and 2020 combined. This showcases the clear and continued interest in this type of investment from the public.

 

Investing in a RegCF Raise

Regulation Crowdfunding is a process through which companies can offer and sell securities to the general public. This process was created by the JOBS Act, and it allows companies to raise up to $5 million per year from non-accredited investors. So what does this mean for investors? Well, basically, it means that you have the opportunity to invest in some of the newest and most exciting startups, even if you’re not an accredited investor. And while you can’t sell your shares for the first year, there are several other benefits of investing in a RegCF company, but you must be aware of how much you can invest before doing so. Because of the inherent risk of investing, the SEC has placed limits on how much nonaccredited investors can invest within any 12-month period.

 

In a 12-month period, nonaccredited investors are limited in the amount they can invest in a RegCF offering. This limit is based on the investor’s annual income or net worth, whichever is greater. If an investor’s annual income or net worth is less than $124,000, then the investor can invest up to the greater of $2,500 or 5% of the greater of their annual income or net worth. If both an investor’s annual income and net worth are more than $124,000, then the investor can invest up to 10% of their annual income or net worth, whichever is greater. However, the total amount invested in RegCF offerings during a 12-month period cannot exceed $124,000.

 

Accredited investors have no limit to how much they can invest in RegCF offerings and are defined as individuals that meet at least one of the following criteria:

  • Annual income greater than $200,000 (or $300,000 with a spouse or spousal equivalent);
  • Net worth of over $1 million (with or without a spouse and excluding the value of the individual’s primary residence);
  • OR holds certain professional certifications, designations, or credentials in good standing, including a Series 7, 65, or 82 license.

 

Calculating Net Worth

To determine how much an individual can invest in securities through crowdfunding, it is vital to understand how Regulation Crowdfunding defines net worth. There are a few ways to calculate net worth, but the most common is to add up all your assets and subtract all your liabilities, according to the SEC. The value of an individual’s primary residence is not included in the calculation of their net worth, and neither is any loan against the residence up to its fair market value. Any increase in the loan amount in the 60 days before the purchase of securities will also be disregarded, to prevent artificially inflated net worth.

 

For joint calculations, you can also determine your combined net worth or annual income by adding your spouse’s income and assets to the calculation, even if the assets are not owned jointly. In these cases, the maximum investment cannot exceed that of an individual with the same net worth. 

 

Once you understand how much you can invest, the only thing left is to do your due diligence! You’ll want to review the provided disclosures so that you can get the full picture of the investment’s risk to ensure it aligns with your level of risk tolerance. 

KoreClient Spotlight: Tech Chain Software

The trucking industry in the United States is a vital part of the economy, responsible for transporting trillions of dollars worth of goods each year. However, it is also an industry that has been plagued by inefficiencies and low productivity for many years. This is where Tech Chain Software and their ResQ TRX app come in, changing the game for truckers across the US.

 

The ResQ TRX app from Tech Chain Software is designed to help truckers be more efficient and productive, while also reducing downtime. It streamlines the entire repair process, allowing drivers, owners, and fleet managers to request and approve service, monitor vehicle and repair status, and send payments all through the app. This makes it easier and faster for truckers to get their trucks repaired, reducing downtime and helping the industry as a whole run more smoothly. By connecting trucking companies to dedicated services, ResQ TRX also provides new business to the service companies that keep America moving. This makes it a win-win for both truckers and the industry as a whole. Telha Ghanchi, the founder and CEO of Tech Chain Software, is passionate about helping and serving truckers, and ResQ TRX is his company’s way of doing just that.

 

As the owner of a small trucking company himself, he knows firsthand the pain that truck drivers and owners go through when a truck goes down. That’s why he created ResQ TRX, to make it an easier and more efficient process for all involved. From the smallest owner-operator to the largest fleets and logistics companies, ResQ TRX is changing the game for how trucking companies do business. The app helps truckers stay on the road by providing them with access to rescue trucks, mechanics, and other resources when they break down. Additionally, Reg CF benefits the company by allowing them to transform investors into brand ambassadors that truly believe in the company and its vision.

 

Mega carriers make up only a small fraction of the companies in the industry and have access to mega repair centers if their trucks break down. However, since the majority of the industry is made up of small businesses, they are often left relying on Google to find the help they need when their truck breaks down. And in remote places, especially in the US, you need to sometimes look miles away to find a mobile mechanic who can look at the project. Since many truck drivers don’t carry the cash on hand to pay for the services, payment is a significant issue at these times as well as the trust of not knowing the job that the person is going to do to fix your truck. 

 

“Every ten minutes you are late on a delivery it snowballs to how much the consumer pays. If you had three trucks and one of them breaks down you are losing 33% of your business,” said Ghanchi. With the trucking industry relying on invoices to be paid about 90 days after delivery, keeping operations afloat can be tricky when a truck is out of commission. This ultimately affects company owners, customers, and employees who rely on the shipment to be made on time.

 

As the market continues to grow, Ghanchi sees this as having a positive effect on truck drivers. A larger repair market will enhance repair service competition, allowing truck drivers to receive better repair pricing. Additionally, the company hopes to offer its debt function, with which the company will loan out the repair cost, allowing ResQ TRX to pay the mechanic and get the work done much faster to get back on the road instead of saving up money to fix this. This is one way they see they can make a huge impact on the industry. “If the truck is running the cash is rolling and they will have money to pay for [the loan],” said Ghanchi. “Our goal is to lower overall downtime in the trucking industry. We are also working with local trade schools to increase the capacity and mechanics of blue-collar workers. Mechanic shops can not take in more work without the resources so we are helping both sides, both the truckers to get their trucks back on the road quickly so they don’t go out of business and the mechanics so they can better serve this industry through ResQ TRX’s innovative solution.” 

 

Regulation CF Disclaimer

 

This communication may be deemed to be a solicitation of interest under Regulation CF under the Securities Act of 1933, in which case the following applies:

 

  • No money or other consideration is being solicited, and if sent in response, will not be accepted;
  • No offer to buy the securities can be accepted, and no part of the purchase price can be received until the offering statement is qualified, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date;
  • A person’s indication of interest involves no obligation or commitment of any kind; and
  • An offering statement, which would include a preliminary offering circular, has not yet been filed with the SEC.

What is the Role of FINRA?

When it comes to investment, there are a lot of things to think about. You want to make sure that you’re making smart decisions with your money, and that you’re not being taken advantage of. That’s where the Financial Industry Regulatory Authority (FINRA) comes in. FINRA is an independent regulator for securities firms, and its job is to make sure that all firms operate fairly and honestly, and that investors are protected–giving investors confidence in the legitimacy of their investment while holding securities companies to a high standard. Keep reading to learn more about the role of FINRA and how they help to protect investors.

 

What is FINRA?

 

FINRA is a not-for-profit regulatory organization authorized by the US Congress to protect investors. FINRA oversees all US-based securities firms and is considered the front line of defense when it comes to investor protection. FINRA’s rules and regulations ensure that all securities firms operate fairly and honestly and that investors are given the information they need to make informed investment decisions. Operating under the auspices of the US Securities and Exchange Commission (SEC), FINRA is the largest independent regulator for securities firms doing business in the United States.

 

Who does FINRA protect?

 

FINRA exists to protect investors, which means that they provide rules and regulations that apply to all securities firms to create a level playing field. They do this through a variety of means, including registration and licensing, monitoring and examining firms, conducting enforcement actions, and providing investor education. FINRA also offers assistance and support to investors who have been wronged by a securities firm. By educating investors about their rights and responsibilities when it comes to investing, FINRA helps protect them from being taken advantage of. In terms of security firms, FINRA’s job is to make sure they are adhering to all relevant rules and regulations, and that they are providing accurate and complete information to their investors.

 

Why is FINRA important?

 

FINRA plays an important role in the investment landscape by ensuring that all securities firms operate fairly and honestly. This helps to create trust between investors and the industry, which is essential for a thriving economy. In today’s day and age, with crowdfunding being available to accredited and non-accredited investors, FINRAs role is more important than ever. Giving peace of mind to investors is one of the most important roles that FINRA plays.

 

What is the role of FINRA as it relates to investment crowdfunding?

 

Investment crowdfunding is a relatively new phenomenon, and FINRA has been working to create rules and regulations that will protect investors while still allowing this innovative form of investing to flourish. The role of FINRA in investment crowdfunding is to protect investors by ensuring that issuers are providing accurate and complete information about their offerings, and that platforms are properly registered and compliant with all relevant rules and regulations. By doing so, FINRA is helping to create a safe and transparent environment for this growing industry.

 

One of the key issues that FINRA is concerned with is the disclosure of information by issuers, which is essential to ensuring that investors can make informed investment decisions. When it comes to Reg CF offerings, FINRA Rule 251(a)(3) requires issuers to file a Form C with the SEC before they can solicit investors. Form C must include information about the issuer, the offering, and the use of proceeds. In addition, all materials that are used to solicit investors must be filed with FINRA. These filings give FINRA the ability to review the offering and make sure that it is compliant with all applicable rules and regulations.

 

Over the Next Five Years, the Private Capital Market is Expected to Double

Over the past decade, fiscal stimulus and opportunities for liquidity have caused a surge within the private capital markets. Even though this year’s outlook is challenged by increasing borrowing costs and economies cooling, London-based research firm Preqin forecasts that the industry’s global assets under management will double to $18.3 trillion by the end of 2027, from $9.3 trillion currently. The study highlights how investors desire to seek alternative investment types in an economic environment characterized by uncertainties. While the first half of 2022 did see a fundraising drop in private capital by $337 billion from $495 billion in the same period last year. However, by 2023, private capital fundraising is expected to return to 2019 levels as the growing trend of private capital continues.

 

Private equity fundraising hit a record $561 billion in 2021, with North America leading the way, followed by Asia-Pacific and Europe, according to Preqin. According to McKinsey North America had about a 22% growth in private capital markets, compared to Europe with 17% and Asia with 13%. This means that for investors and companies raising capital, the US is a more attractive market than Europe and Asia and is a great place to market your private capital offering, notably through JOBS Act regulations like Reg A+ and Reg CF. 

 

Private markets have been able to continue to grow during this pandemic because of the growth in digitalization and the internet. This has allowed for a decrease in face-to-face interactions, which has made it easier for managers to connect with LPs, as well as an increase in online tools and resources. For example, many fund managers have started using online data rooms, which allow investors to access documents and due diligence materials remotely. In addition, online investor portals have become more popular, providing LPs with 24/7 access to information on their portfolios.

 

The study found that the average private equity fund size has increased over the past decade, while the number of first-time funds has declined. The report attributes this to the “maturing” of the industry and the rise of large institutional investors, which have become an increasingly important source of private capital. Institutional investors, such as pension funds, insurance companies, and endowments, are allocating more of their portfolios to private capital as they seek higher returns. Private markets have outperformed traditional public markets in recent years, but that outperformance is expected to moderate over the next decade. Preqin’s study predicts that private equity returns will net 7.6 percent annually between 2018 and 2027, compared to 6.4 percent for public markets.

 

According to Preqin, the interest in impact investing has also increased in recent years. The firm estimates that there are now more than 3,000 impact funds globally, with assets under management totaling $228 billion. In particular, environmental, social, and governance (ESG) considerations are becoming increasingly important to private capital investors. A majority of private capital firms say that they consider ESG factors when making investment decisions, and almost half of firms say that they have adopted policies or strategies specifically focused on impact investing. As the private capital markets continue to grow, firms need to consider how they can best position themselves to capitalize on this growth.

 

The private capital markets are expected to continue growing in the coming years, presenting a unique opportunity for raising capital. In addition, the growth of the private capital markets may lead to more regulation, as policymakers seek to mitigate risk and protect investors. Overall, the study provides a positive outlook for the private capital markets. For firms looking to take advantage of this growth, it’s vital to consider how they can best position themselves to capitalize on these opportunities. For investors, this means considering which private capital investment opportunities offer the best potential returns. But regardless of how the private capital markets evolve, one thing is clear: they are likely to play an increasingly important role in the global economy.

Digital Securities That Help You Navigate the Web Safely

The internet is often difficult to navigate. On one hand, many wonderful resources can be found for educational purposes, you can connect and communicate with anyone anywhere in the world, and new ways to manage financial investments are accessible at the tip of our fingers. But on the other hand, it can sometimes be difficult to determine the legitimacy of a website or investment opportunity. Fortunately, digital securities are changing the way these transactions are carried out, introducing new levels of transparency and trust when implemented correctly

 

Navigating the Web Safely

 

Some features that help people navigate the web safely include things like two-factor authentication (2FA) or blockchain-based identity management systems. 2FA is a critical security measure requiring users to provide two forms of identification to log into their accounts. This can be something like a password and a fingerprint or a one-time code that is sent to your phone. Blockchain-based identity management systems work similarly, but instead of using passwords, they use cryptographic keys that are stored on a blockchain. This makes it impossible for hackers to access your account unless they have your private key. Both solutions are important for ensuring that only the account holder can access the account. These tools also make it more difficult for hackers to steal your identity by masquerading as you online. By using 2FA or a blockchain-based identity management system, you can help navigate the web safely and protect your online information.

 

Digital securities are an essential part of the digital economy, and KoreConX is committed to making them more accessible and easy to use. Our KoreID feature is just one example of how we are innovating in the realm of digital securities. With KoreID, investors can easily and safely provide their information to regulated platforms. As a result, the need for investors to fill out the same information, again and again, is eliminated, saving them time and hassle. With this digital security innovation, when investors are making investments through JOBS Act exemptions, they are less susceptible to fraud. And for issuers, the KoreID gives them peace of mind knowing that they can easily prove that they are in good standing with FINRA and registered funding portals. Digital securities are an essential part of the digital economy, and KoreConX is committed to making them more accessible, safe, and easy to use.

 

Benefiting from the Innovation of KoreID

 

KoreID is a digital securities innovation that allows investors to navigate the web safely. The feature is an all-in-one platform that reduces the friction of investors spending time filling forms with the same data repeatedly. Users are allowed to provide certified information with one single click, facilitating a smoother investment or reinvestment. This also reduces the known issues in compliance that broker-dealers face when users “fat finger” their information, accidentally misentering their information. 

 

The KoreID is a blockchain-based digital identity that is stored on the user’s device and can be used to log in to any site that accepts KoreID. The user’s data is kept secure and only shared with sites that the user has authorized. KoreID is convenient, safe, and easy to use, making it the ideal solution for investors who want to navigate the web safely. Only verified, regulated participants can be allowed to add the KoreID, giving investors peace of mind and allowing companies to easily maintain compliance efforts.