Analysis

SEC's 1st Crowdfunding Enforcement Turns Heat On Portals

By Tom Zanki (September 24, 2021, 9:40 PM EDT) -- The U.S. Securities and Exchange Commission's decision to target a crowdfunding portal in its first enforcement action involving such capital campaigns sends a strong signal that regulators expect intermediaries to thoroughly vet these fundraising efforts or face repercussions, attorneys said.

The SEC on Sept. 20 alleged two cannabis-related companies, 420 Real Estate LLC and defunct TransAtlantic Real Estate LLC, bilked investors after raising money in separate campaigns for projects that never materialized. Instead, company principals pocketed the proceeds for personal use, the agency said.

Regulators also sued the operator of a funding portal used in both campaigns, TruCrowd Inc., for allegedly...

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