April 30, 2012
CrowdCheck, Inc. welcomes the opportunity to suggest two related issues upon which regulatory guidance would be appreciated when the SEC considers its crowdfunding rules.
Several companies have been formed to provide services to crowdfunding entrepreneurs and investors, separate and apart from the services provided by "funding portals." CrowdCheck, for example, intends to undertake "due diligence" investigations on companies seeking crowdfunding, to publish the results of those investigations on its own website and to permit companies to refer to the fact that CrowdCheck has performed due diligence on the companies' disclosure, either on the companies' own websites or on funding portals.
We believe that CrowdCheck's publication of the result of a due diligence check, and the issuer's referral to the results of such a check, would not constitute "advertisement" of the terms of the offering by an issuer in violation of the provisions of new Section 4A(b)(2) of the 1933 Act.
We also believe that the services provided by a company such as CrowdCheck would not fall within the statutory definition of a funding portal in new Section 3(a)(80) of the 1934 Act in that such company would not be "acting as an intermediary" in the offer or sale of securities.
We would ask that any rulemaking or other guidance provide clarification as the impact of these provisions on third-party service providers not acting as funding portals.