As a result of the stock market crash of 1929, new legislation was passed with the goal of providing greater regulation of the offering and trade of securities, such as stocks and bonds. As part of the legislation, the Securities and Exchange Commission (SEC) was established. The goal of this agency is to provide consumers with increased information for decision making, regulate trading in securities, and guard against fraud. Using the information presented in the scenario below respond to the following in a 1- to 2-page paper: Mark is a San Francisco businessman who owns an older motel on the shore of Lake Tahoe in Nevada. The motel next door to his, also on older motel, recently came onto the market for sale. Both of these motels have a relatively large amount of land. The restaurant and lounge areas of each contain a few slot machines, and Mark’s motel has a poker table, but there is currently no other gambling at either location. Mark is considering buying the motel next door, and using the combined premises to open a luxury resort and casino. He has not yet decided whether he will remodel the current buildings, or demolish them and start from scratch. Mark plans to invest a couple of million dollars of his own, but will need to raise around $50,000,000 to get this venture going. Discuss Mark’s options in raising this money. What options would subject Mark to the Securities Act of 1933? Could Mark qualify for any exemptions under the securities laws? If so, which exemptions might he qualify for? If Mark is subject to the Securities Act of 1933, with what general requirements must he comply? Your written assignments must follow APA guidelines. Be sure to support your work with specific citations from this week’s Learning Resources and additional scholarly sources as appropriate.

Name:

Institution:

Dates:

a) Mark’s options for raising money

As an individual investor, Mark has various options for raising money to get his venture going. As with many small businesses, some money is raised from gifts given by family and friends. Other options include lines of credit and loans from financial institutions. However, some these sources of funds become exhausted before the business becoming self-sustaining. According to Securities and Exchange Commission, one can also raise money through crowdfunding (U.S securities and exchange commission, 2014). This is a method in which money is raised through soliciting small individual investments or other contributions from a large number of people. According to the crowdfunding website in the U.S., it has been proven a popular way to receive donations and funds for artistic businesses such as recordings and music. Therefore, Mark can invest in the crowdfunding securities offering to raise money for his venture (Securities Act of 1933, 2014).

b) Crowdfunding will subject Mark to Securities Act of 1933
c) Yes, mark can qualify for exemptions in the private laws
d) Exemptions Mark can qualify for

Mark can be eligible for an exemption under Regulation D of the Securities Acts. This is because Mark’s business is a private placement. Under the securities laws, a company may not be allowed to sell its securities unless that offering has been registered. Because of Mark’s case of a private placement, he is not subject to laws and regulations which are made to protect the investors, such as to the disclosure requirements that applies to registered offerings. Private funds are hence allowed to engage in private placements (Insured Retirement Institute, 2009).

e) If Mark is subject to Securities Acts of 1933 the following are the general requirements that he must comply with.

His securities must be registered with Securities and Exchange Commission of 1933.
He must disclose certain information about the securities, including its financial statements.

References

Insured Retirement Institute. (2009, May 05). About us:Regulations Under Federal Securities Law. Retrieved from Regulations Under Federal Securities Law: http://www.irionline.org/government-affairs/annuities-regulation-industry-information/regulations-under-federal-securities-law

Securities act of 1933. (2014, December 4). About us: Securities Act of 1933. Retrieved from Securities Act of 1933: https://www.sec.gov/about/laws/sa33.pdf

U.S securities and exchange commission. (2014, 24 Sept ). Investor Bulletin: Private Placements. Retrieved from Investor Alerts and bulletin: https://www.sec.gov/oiea/investor-alerts-bulletins/ib_privateplacements.html

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