Mass. Secretary: New unit to monitor crowdfunding
BOSTON (AP) —
Massachusetts Secretary William Galvin has formed a new investigative unit to monitor so-called “crowdfunding” websites that use the Internet to solicit a large number of smaller investors.
Galvin said that while no single state can fully oversee the Internet, he feels the step is important to help protect investors in Massachusetts.
Galvin pointed to the federal 2012 JOBS Act which lifted the ban on businesses raising money by advertising private deals.
He said that means hedge funds, private equity funds, angel investments, and other small businesses can advertise on the Internet, social media sites and television.
He said the law also allows existing crowdfunding sites to raise equity by selling securities to average, unaccredited “mom and pop” investors.
Galvin said that creates a much easier path for “shady operators and outright crooks” looking to scam investors.