Subject: File No. S7-09-13
From: Robert Shatz
Affiliation: CEO, CarbonTech Global LLC

October 24, 2013

Questions 165 and 166 relate to risk for retail investors. Even when retail investors invest into initial public offerings on the stock exchanges, they are allowed to sue the issue or the broker if they lose money. Sophisticated and institutional investors are expected to take full responsibility for the loss of all funds - not the broker or the issuer.

The point is that once one crowd funding deal goes bad, the retail investor will sue to get their money back. If you tell them that they already signed a document saying that they would take full responsibility, retail investors will argue that they did not know the true risks and were not told the true risks even though they sign the risk disclosure document. They do that in the publicly listed markets already and get away with it.

Therefore, a key part of the disclosure process SHOULD BE to explain that lawsuits only work for fraud or negligence. Lawsuits cannot be filed just because the retail investor loses their risk capital.

Lawsuits by retail investors on deals that fail will be the undoing of crowd funding.