Scam of the day – June 22, 2012 – Crowdfunding

The JOBS act recently enacted by Congress was done as a way to make it easier for entrepreneurs to raise money for new business ventures.  It reduces requirements for audited financial statements and other informational documents for companies going public with revenues less than a billion dollars.  This may well help entrepreneurs in developing new businesses, but it also is a great benefit to scammers because the law allows business developers to set up websites to seek out potential investors.  This is called crowd funding and the regulations required to set up such a website to seek investors are pretty slim.

TIP

The SEC is still developing rules for crowd funding, but anyone considering investing in such a manner should be extra careful in getting as much information as possible to evaluate the legitimacy of the investment.  Just because it will have a recognized crowd funding portal does not mean that it is legitimate.