Subject: File No. S7-09-13
From: Matthew R. Nutting, Esq.
Affiliation: Executive Director, National Legal Director

January 31, 2014 is a website dedicated to expanding education of rewards and equity crowdfunding, as well as encouraging networking of crowds and groups of supporting industries.


The Proposed Rules in RFC Nos. 80-91 seek public comments on the nature, method and extent of an offeror's obligations to communicate financial information to the investors and public.


In a general sense, we request that your agency consider a few important issues when determining the nature and extent of an offerors duties to disclose financial information both in the original offering, but also to shareholders after an offering is closed.

In short, we recommend that the final rules funnel financial statements through the Intermediaries up through the close of an offering, and then allow the management of shareholders to happen by direct communication channels set up by the offering company. There are two primary reasons for this approach.

First, unlike public companies, Title III offerings will be closed investments. Internal financial information should not be made avaiable to the public (in reach of competitors and opposing parties on contract negotiations). Protecting this information might be fundamental to the type of business.

Second, virtually all of the rights of shareholders, members, and partners are driven by state law. The corporations codes in each state typically establish absolute rights of shareholders to inspect records and obtain an accounting. By adding on-going requirements through EDGAR or otherwise the system will inadvertantely become duplicative and place more burdens on small businesses. While the blue-sky securities laws of states can be easily preempted by the SEC, the state corporate laws may not. For this reason only a relaxed SEC rule can be blended with state laws and avoid heavy burdens on small organizations.

Many companies that are looking to utilize Title III offerings are already structuring their entities to handle a potentially large group of shareholders (who might be all over the country). The idea of making a small company with little staff need to send physical mailed copies of financial reports to, say, 1,000 shareholders is not practical at all.

The ideal approach which balances the shareholders' access to information, while minimizing burdens and inadvertant disclosures to hostile parties is through a code-accessed website (whether the company's or one that is accessed through the market). Many market-driven options are presently underway in this regard.

We appreciate you taking these comments into account. We can provide any amount of follow up information on request.


Matthew R. Nutting, Esq.
Executive Director