Am I breaking any securities laws if my investment group moves forward with a new business model?

Get Legal Help Today

secured lock Secured with SHA-256 Encryption

Am I breaking any securities laws if my investment group moves forward with a new business model?

In a nut shell, members pay a membership fee and that fee is directly used to fund small businesses of their interest pooled together with other members using their fee to create a large investment in a company. The funded company gives up “X” equity stake for the investment and the group of members split that ownership evenly and we move on to the next opportunity/investment in a company.

Asked on January 16, 2012 under Business Law, Texas

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

In many states in this county, your busienss model may be in violation with state securities laws by making a public offering of a "security' without the required registrations and approvals under requirements under your state's Department of Corporations.

If the business opportunity is given to people that you actually know, then I do not presently see a security violation assuming the venture is adequately capitalized. However, when the type of investment is offered to the public at large which yours seems to possibly be, there very well could be security requirements that you need to comply with before there is a public offering.

I recommend that you consult with a business attorney before you move forward on any public offering as to your new business model.

 


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption