Stating that the Securities and Exchange Commission's newly allowed hedge fund and private equity ad rule "sets in motion a much easier path for shady operators and outright crooks," Massachusetts Securities regulator William Galvin (left) announced Monday that he's setting up a new unit to monitor crowdfunding activity in the state.
The new unit, to be manned by securities division staff and attorneys, is dubbed the Internet Crowdfunding and Offerings Watch Department, "I-CROWD." It will monitor not only crowdfunding websites but also advertising of private placements under Regulation D's Rule 506.
"I do not begin to think that one state can monitor and police the Internet," Galvin said in a statement. "But I am going to take every proactive step I can to protect investors in the Commonwealth from those who would abuse the provisions of the JOBS Act."
For the benefit of all state securities regulators, the North American Securities Administrators Association established last December a task force on Internet fraud investigations to monitor crowdfunding and other Internet offerings. NASAA spokesman Bob Webster says that he's "not aware of any other individual states" besides Massachusetts that has created a separate crowdfunding unit.
