Global fintech and funding innovation ecosystem

SEC takes legal action after crowdfunded marijuana investment scheme appears to go up in smoke

The Register | Tim Richardson | Sep 21, 2021

Crowdfunding how to spot a scam - SEC takes legal action after crowdfunded marijuana investment scheme appears to go up in smokePlatform and individuals charged in first case of its kind

US financial watchdogs have launched legal action against a cannabis-related investment scheme said to be the first case involving crowdfunding regulation.

The Securities and Exchange Commission (SEC) filed a complaint against three people – named as Robert Shumake Jr, Willard Jackson, and Nicole Birch – and Texan firm 420 Real Estate in the Eastern District court in Michigan, claiming the trio had been involved in selling nearly $2m in unregistered securities through two crowdfunding schemes.

See:  Crowdfunding Is Revolutionizing The Cannabis Industry. Here’s Why.

The SEC also charged the registered funding portal that hosted the offerings – TruCrowd – and its CEO Vicent Petrescu (name spelled as listed), with violating Section 4A(a)(5) of the Securities Act and violating crowdfunding rules, alleging they "served as gatekeepers and, as such, were responsible for taking measures to reduce the risk of fraud."

In papers filed yesterday [PDF], Shumake, Jackson and Birch were accused of marketing both offerings as "opportunities for investors to share in bountiful profits from the cannabis industry, by acquiring real estate and leasing it to companies engaged in the business of growing cannabis."

However, the complaint lodged by the SEC claimed that none of the money raised had been used to "acquire or improve cannabis real estate" as set out.

"None of the investors in either crowdfunding offering has received any return on their investment, and few investors have recovered any of the funds they invested," the watchdog said.

See:  SEC Votes to Approve Changes to Regulation Crowdfunding Increasing the Maximum Raise to $5 Million

Gurbir Grewal, director of the SEC's Division of Enforcement said:

"As companies continue to raise funds through crowdfunding, it will continue to make sure all involved are "accountable" and, if needs be, "enforce the protections in place for all investors."

Last year, the SEC relaxed the rules around crowdfunding limits, raising the ceiling from $1m to $5m.

Continue to the full article --> here


NCFA Jan 2018 resize - SEC takes legal action after crowdfunded marijuana investment scheme appears to go up in smoke The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - SEC takes legal action after crowdfunded marijuana investment scheme appears to go up in smokeFF Logo 400 v3 - SEC takes legal action after crowdfunded marijuana investment scheme appears to go up in smokecommunity social impact - SEC takes legal action after crowdfunded marijuana investment scheme appears to go up in smoke

Support NCFA by Following us on Twitter!







NCFA Sign up for our newsletter - SEC takes legal action after crowdfunded marijuana investment scheme appears to go up in smoke




 

Leave a Reply

Your email address will not be published. Required fields are marked *

sixteen − three =