Investigators Probe Shady Crowdfunding Sites
The Securities and Exchange Commission has yet to issue its guidelines that will officially unleash online equity crowdfuding to the masses, but that hasn't stopped the torrent of entrepreneurs and organizations from getting their ducks in a row.
According to a December report by the North American Securities Administrators Association, regulators found nearly 8,800 domains with "crowdfunding" in their names as of November 30, 2012, "up from less than 900 at the beginning of the year." Only about a quarter of those sites contained any content at all, which leads the agency to believe they are serving as placeholders for future crowdfunding portals, perhaps readying to launch once the SEC implements its investor guidelines.
There's no accusation (just yet) of any fraud, but regulators are taking precautions to protect investors. The Wall Street Journal reported Friday the the regulators are now probing some 200 websites that may pose "possible threats to investors following the looming change."
For perhaps the most comprehensive list of crowdfunding platforms on the Web, check out a list compiled by Ari Massoudi, a former biomedical researcher turned start-up consultant. The 29-page .pdf lists several hundred new crowdfunding platforms registered to domains around the world.
"Many of these sites appear to have been formed by large credible organizations while others appear to be created by individuals that may be operating out of their basements," Robert Moilanen, the Minnesota Securities Director and chair of the North American Securities Administrators Association's Internet Fraud Investigations Project Group said in a statement in December. "The pure volume suggests that the wave is about to overtake the dam."