SEC files enforcement action against alleged crowdfunding scheme
September 20, 2021, 2:38PM EDT
1 min read
The Securities and Exchange Commission (SEC) has charged those involved with a crowdfunding scheme for allegedly selling $2 million in unregistered securities.
In an announcement today, the agency claims Robert Shumake, Nicole Birch and Willard Jackson conducted fraudulent crowdfunding offerings through cannabis and hemp companies Transatlantic Real Estate LLC and 420 Real Estate LLC. The SEC also says Shumake hid his involvement, since he worried his prior criminal convictions could sway investors away from the project.
Through the two companies, the SEC claims the group raised $2 million over the crowdfunding platform TruCrowd. The SEC has charged the platform and its CEO, Vincent Petrescu, as well since he "failed to address red flags" and continued to host the ventures on his platform. Petrescu and TruCrowd are facing charges of violating the crowdfunding rules of the Securities Act.
The SEC amended its regulation crowdfunding rules in late 2020, increasing the regulation crowdfunding offering limit from $1 million to $5 million. Still, firms must register with the agency to comply with crowdfunding rules. The agency has yet to take action against crowdfunding offerings. This case against TruCrowd, Transatlantic Real Estate LLC and 420 Real Estate LLC represents early enforcement steps related to the rules.
Shumake, Birch and Jackson area facing charges related to antifraud and registration violations. The SEC is seeking disgorgement, penalties and permanent injunctions in its case, which was filed in the U.S. District Court for the Eastern District of Michigan.
Post-trade in capital markets today operates primarily based on provision of balance-sheet to off-set counterparty risk, either directly or indirectly, via settlement agents, CCPs and CSDs etc. The issues with this ‘hub and spoke’ model are well known, including the resulting massive duplication of data, bifurcated processes, concentration of risk and subsequent deployment of capital and resources that could be better utilized.
On this episode of The Scoop, eToro's newly appointed US lead Lule Demmissie explained why she doesn't see retail's newfound presence in the market subsiding anytime soon and how eToro plans to capitalize on growing the business across cryptocurrencies and stock trading.