Stewart McKelvey

Vol 3 Issue 1 Spring 2013

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CROWD FUNDING A New Brunswick business lawyer���s perspective By Peter Klohn A person enters a casino (real or virtual) and places a bet of $1,000 on a single number on a roulette wheel. The player has a general understanding of the game and its outcomes. Within seconds, the participant receives $35,000 or has lost their bet. There are widely diverse opinions about the social value of this transaction notwithstanding the fact that it occurs in an extraordinarily regulated environment which is evolving constantly. A person signs onto the Internet and discovers a request for funds from a commercial enterprise that is in its infancy. On the basis of limited information, money changes hands with a 2 SPRING 2013 DOING BUSINESS IN ATLANTIC CANADA potential for gain or, most likely, since the failure rate of fledging ventures is high, likelihood of total loss. The debate in Canada is ongoing about the social value and proper regulatory environment for transactions in this proposed social media marketplace called ���crowd funding���. As yet, the Canadian provincial securities regulators have not weighed in on the topic notwithstanding early regulatory advances in the United States including the passage in April 2012 of the Jumpstart Our Business Startups (JOBS) Act into law. Delays in the issuance of regulations by the Securities and Exchange Commission (SEC) in the United States suggest that there may be little legislative progress

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