Canadian Lawyer

w w w . C A N A D I A N L a w y e r m a g . c o m J u n e 2 0 1 4 41 and screening, rather than dropping to the lowest common denominator to ensure uniformity, would go down well with many people in the field. Apps, for example, is concerned not enough discussion has cen- tred on the need to protect and educate investors. Whereas securities investment has traditionally been "the playground of the rich," the mooted changes would allow a broader group of people to participate in risky ventures, he says. "They may know very little about the business or the people behind the business, because most of these companies will be very little more than simply an idea," Apps adds, encouraging the portals to take ownership of the issue. If investors treat their contributions as akin to betting on horses or playing the lottery, their expectations may be aligned with reality, he says. But he warns without a sufficient understanding of what they are getting into, investors could end up feeling cheated and frustrated, which would back- fire on issuers and portals in the long term. The threat of fraud and money laun- dering is one of the main fears raised by opponents of equity crowdfunding, espe- cially taking into account investors' rela- tive lack of sophistication. Investors will certainly need to be on their guard. Alixe Cormick, at Vancouver-based Venture Law Corp., says angel investors in B.C. normally mark down issues by up to two-thirds from the valuation provided by startups. "With crowdfunding, the price put up there is determined by an issuer and whoever their consultants/lawyers are," she highlights. Cormick agrees on the need for portals to make the risks clear to the public, but is less concerned about the danger of equity crowdfunding platforms being exploited by con artists. "The Internet has a long memo- ry. That's a really strong deterrent for doing anything crazy," she says. Investors are very likely to check a business' online footprint, which she feels significantly reduces the likelihood of large-scale fraud. As the plans are all still out for consul- tation, it is hard to accurately gauge their impact on the startup community, or the amount of business the changes could gen- erate for lawyers. "The size of it and where we play a role would ultimately depend on the exemptions adopted by the provinces," says Lorenc. "If it's usable, and people see it as being an effective way to raise capital, we could have quite a bit of work." It seems unlikely anything will be imple- mented before the end of the year. OSC vice chairman James Turner is reported to have told delegates at a National Crowdfunding Association of Canada event in April they should not expect to see any official rule changes until 2015. There is a risk that, by the time these new regulations are adopted, they will already be outdated, says Roy. "Even though equity crowdfunding is a fairly new way to raise capital, I expect the technol- ogy will evolve, I expect investors' wish to participate will evolve, and the regulators will need to evolve," she says. "It's a com- mendable process, but this has happened over two years almost already, so there will be a bit of catch-up to be had," she adds. E V E N A P OW E R H O U S E C A N U S E M O R E P OW E R . Henein Hutchison is pleased to announce that Murray Segal will be joining as counsel. As former Deputy Attorney General of Ontario and long-serving Chief Prosecutor, he has over 30 years of experience. Murray is a legal icon, known for his innovation in public administration, and is respected as an unparalleled strategist. He knows that every problem has a solution and he has a track record of results to match. A conflict resolution specialist, litigator and advisor on complex litigation, Murray represents clients in both the public and private sectors. More experience. More defence. hhllp.ca Untitled-5 1 14-05-07 5:13 PM

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