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Who stole Greta Thunberg’s childhood?

June 26, 2020

First, let’s start in order! I am for world peace, and I am for the ecology! Civilization has accumulated environmental problems, and they undoubtedly must be resolved in the near future ASAP. No one argues with that! Again, the tools with which a certain part of the global liberal-democratic power, through the hands of the Greens, is trying to influence public opinion cause doubts and dislikes. Despite all the cries for equal rights, ecology, equal chances, gender and juvenile rights, liberal institutions began to exploit the fragile psyche of kids. Yes, today we will talk about Greta Thunberg!

All the world media is talking about her now. However, we will consider the phenomenon of Greta both from the side of utility and harm. Someone say the following: this is a Swedish schoolgirl with a strong civic position, who has become famous for her stupid and heart-rending actions about an environmental disaster, and has become a role model for a dumb young liberals in many countries of the world. Others say: smart, well done, better youth, fighter, she has her political future.

What did we see on the cover?

Little Greta, who suffered, in her own words, from anorexia and depression (she also, according to the media, was diagnosed with Asperger syndrome, which can be considered the easiest form of autism), suddenly in 2018 realized that the world would soon die from global warming, and to prevent this, she stopped going to school on Fridays. After that, the brave girl Greta became a world hero, crossed the Atlantic under sail and spoke on the UN platform recently in September 2019. After Greta’s speech, the leftists of the whole world shuddered in a single ecstasy of admiration. The Guardian compared Greta to Abraham Lincoln! This too active behavior of left and left-wing radical activists, partially revealing the nature of the phenomenon of the girl Greta. A teenage girl suddenly became the face of the global youth green movement and was nominated for the Nobel Peace Prize. In a sensitive yellow (left-wing radicals color) jacket and with a large poster, she went out day after day to the building of the Swedish parliament. The young activist was noticed, Facebook marked her profile with a blue checkmark of a famous person (and we know that Facebook suffers from left-wing radical views and values). Then came an invitation to speak in Davos (another world meet up of wealthy left oligarchs from around the world), and now, hundreds and thousands of followers around her … World media report that 1.5 million schoolchildren from 125 countries took part in protests against climate change instead of going to school. Great story isn’t? No, this is, first, an excellent performance, the liberal world troublemaker Soros paid for the production of which.

First, the Swedish press writes that Greta is not at all a simple girl from the street. She is from a well-known artistic family in Sweden: her father is an actor, her mother is an opera singer, who represented Sweden at the Eurovision Song Contest in 2009, and her grandfather and grandmother are actors and directors as well. After all, adequate people understand that education in such a family is not quite simple, and such people perfectly understand how to tell their daughter how to promote herself properly. No one believes in the agenda that her parents did not support her and Greta herself, through denial, gradually began to attract them to her public green activity systematically. I do not believe that, having noticed the first signs of success; adults did not help her with at least professional advice.

The fact is that shortly before the start of “Fridays for Future”, Greta’s parents released the book “Scenes from the Heart”, which tells how mental disorders of children made them think about the health of the planet. What a lovely coincidence! The version may seem quite plausible that in the case of Greta Thunberg we get endless arguments that the Swedish schoolgirl is an unhappy puppet in the hands of the world behind the scenes, her parents, “leftists” and many others as well. Nevertheless, such a version has the right to be real. The quick success and instantly untwisted worldwide popularity give reason to think about it. What is already hysteria around her name today? The worship of Greta takes on a religious character. “Greta Thunberg is the prophet of our time! .. She is completely comparable to the biblical prophets”, says the Swedish Social Democrat and radical feminist Anna Ardin (who was allegedly raped by Julian Assange?). The girl’s mother gives her daughter supernatural abilities; EurAsia Daily quoted her as: “Greta belongs to the small number of people who can see carbon dioxide with the naked eye. She saw how greenhouse gases flow from our chimneys, soar, rising upwind, and transform the atmosphere into a giant invisible landfill”. In this case, if you are an adequate person, you need to treat the mother rather than the daughter. It got to the point that the Lutheran church in the Limhamn district of the Swedish city of Malmö declared: “Jesus chose Greta Thunberg as his successor”. Deputies of the Swedish Riksdag from the Left Party and deputies of the Norwegian Storting from the Socialist Left Party (both structures unite eco-socialists, neo-Marxists, LGBT activists and radical feminists) nominated Greta Thunberg for the Nobel Peace Prize.

All these facts indicate that “Greta Thunberg” is a project!!! The initial PR managers were left-wing Scandinavian globalists.

For some time, the project was supervised by Swedish PR man and businessman Ingmar Rentzhog (who did not fail to use her name to attract millions of dollars to his environmental startup We Don’t Have Time) (https://www.wedonthavetime.org) and the owner of Stockholm PR offices of Iles PR Helena Iles (by the way, an old friend of the girl’s mother). The Swedish newspaper Svenska Dagbladet wrote about this last year. Since the winter of 2018, serious supranational structures like the Club of Rome have already started promoting the project (on March 14, 2019, it issued a special statement in support of Greta). The direct management is carried out by the Soros Foundation and the Marshall Global Plan organization (headed by former US vice president Al Gore, George Soros looms among the main figures), whose experienced representatives formed the “coaching staff” at Thunberg, inspire and indicate the right direction, create texts, provide protection, cut off unwanted people. In many photos and videos next to Greta, you can see the young German political scientist Louise-Maria Neubauer, who is functionary for the Bill and Melinda Gates’s ONE Foundation and Soros Open Society global fund. Such a funny left-wing radical campaign seeks Greta’s innocuous actions on Instagram with the hashtag #Fridaysforfuture over time to turn into a dictatorship of young environmental hunveibins.

What is Greta fighting for? Most likely, Greta’s intention (if she has one at all) is to arouse concern in people, especially politicians, about climate change and to give the problem the widest possible publicity. Greta plans to go on strike until the governments of the leading countries of the world (including Sweden) take the necessary measures to ensure that the average temperature increase on the planet is within 2 ° C. Greta did not take these figures from the ceiling — these requirements were developed by scientists for the Paris climate agreement in 2015, and they are quite real. To achieve such a result, Thunberg proposes a 15% reduction in carbon dioxide emissions, as prescribed by the agreement. Well, who is interested in implementing such agreements?

Our ubiquitous Transnational companies, which supposedly fulfilling such a framework of the agreement, will be able to prevent the developing economies of the world from stepping on their tail, effectively hampering their economic development, while they themselves can calmly, without competitors and preserving their corporate income, receive benefits and profits, even at such rates of moderate decline in development. Therefore, Greta in the eyes of understanding people has become the logo of ‘’Ecology as a business’’. What kind of result can be? Climatic problems will still be there and the same, no any new recipes for their solution have been proposed yet, especially since Greta is not capable of them. Trump did not believe in global warming, but believed in the revenue side of the budget. Students skip classes for Fridays. Greta received that very blue checkmark on Facebook and, no doubt, will begin a political career soon. The Nobel Peace Prize continues to lose its significance and turns into a libertarian farce.

Well, what about Greta? Is child exploitation for political games ethical?

The world has rarely seen such a meaningless and so infantile speech from an unbalanced teenager, whose mind was torn off from her triumph. What can I say … All totalitarian ideologies are happy to exploit this feature of the psyche of a teenager — a desperate desire to establish itself at the expense of adults, combined with suggestibility and infantilism. Let the teenagers turn over this order of things so hated by them. Let them not go to classes! Let the children with a weak mentality teach teachers, beat teachers, and humiliate professors. Look carefully at Greta’s speech at the UN in September 2019, look at her intonation, facial expressions, gestures, tone of phrases. After all, everything is saturated with hatred, anger and annihilation, and not kindness, pacification, and appeal. After such a speech, the green movement and ecology will very quickly become synonymous with terror, radicalism and destruction. In this way, environmental issues cannot be resolved and attention cannot be drawn to them; on the contrary, they can scare, reject, and omit the importance of the issue. Ecology remained in its place, but Greta divert attention from ecology to the side. Indeed, the issues of forecasting and modeling environmental models are a vague and unclear question; there are still no clear tools, only the fantasies and theories of professors working out grants from the left-wing radical funds that we mentioned above. There is still no stochastic system, exact mathematical modeling, which with accuracy was able to at least describe and determine the motion of air masses in the planet’s atmosphere. In this matter, so complicated differential equations are obtained that to describe the climate of an entire planet with binary code is a still difficult task.

But there are still a bunch of components: streams of solar radiation differentiated in time and space, small and large cycles of solar activity (11-year-olds, 22-year-olds, as well as 80–90-year-olds (Gleisberg), ocean currents (surface and deep-sea), salinity of ocean, continental drift, changing albedo of the planet’s surface, the precession of the Earth’s rotation axis and … rotation of the rotation ellipse of the same Earth. There are also volcanoes, decaying organics, faults in the earth’s crust, the climate history of the planet, where a hundred years of meteorological observations a roaring moment and global shifts took place without the participation of any civilization. Do green activists, leftists, and Greta know that such a loudly promoted model of “climate change” is just a model (among many others!), and not reality. Moreover, not yet universally recognized? Our Transnational players quickly realized that climate agreements are a very effective tool for influencing investments in developing countries, this is a way to regulate industry in other countries from the outside, and finally, it is a gigantic speculative market where you can trade harmful emissions quotas, insurance speculative risks and a full range of related financial instruments. And Greta’s place here is to raise interest and bet on speculations and quotas around these climate agreements. Business is just business and nothing more.

Greta is also used by environmental extremists seeking to establish their dictatorship. It seems like a fantasy? Well look, do not oversleep. Greta is being exploited, it is in its purest form a political forbidden device — using children to achieve political goals, although ecology is not politics today?

This is undoubtedly a crime — when a child is used for such purposes, and autist. They are all essentially criminals who do this (parents, mentors, politicians, the press). They are the same criminals as those who armed the children and sent them to fight and kill. They mutilate Greta and deprive or have already deprived her childhood. They try to speculate on the feelings of primitive infantile, but very naive adults, and there are many of such people, unfortunately not able to analyze. There are no lofty goals for which you can sacrifice children; this also applies to the environment. They disfigured life of unhappy Greta. In addition, this is not because “the world has gone mad”, but because in the pursuit of political profits people have lost the last vestiges of conscience. Children have always been a favorite subject of political advertising and manipulations. The voter loves children — this is a win-win option for campaigning and stimulating political processes and changes in the social lifestyle.

So gradually, voters around the world will be prepared for certain environmental restrictions that have not yet been proven (as we discussed above) whether they can positively affect the climate, the economy, and society. The history of the planet knows many proven examples of both climate warming and cooling. After all, all these processes are cyclical and depend not only on human activity on the planet, but also on factors of cosmic significance. We are now in the phase of global warming, so when the phase of global cooling sets in, I am sure that the liberal greens, or who else will be there, will find another Greta who will yell about the need for global warming. History repeating! It is not ethical to use children, and it is not pleasant to look at Greta’s tantrum. Remember, the baby falling out of the window created an atmosphere of horror in Lars von Trier’s ‘’Antichrist’’. A win-win move. That appeals to our subconscious. Greta does the same with the subconscious of the majority. Moreover, this is another ethical violation. No matter what such a child saying. It does not matter if the society accused by Greta is sick or Greta fell ill, unable to cope with the pressure of this sick society. What matters is what exactly she advertises, and how we will perceive it. This works equally well in advertising for yogurts, diapers and politicians, as well as, as it turned out, in the issue of pressure on world governments and manipulating public consciousness.

Greta will not solve the problems of ecology, they will remain!

Problems will remain, and after a scorched field such as Greta and the radical left, there will be even more problems. Today it is difficult to overestimate the importance and role of ecology both in the life of the whole society and separately in the life of every person. So the state of the planet depends both on commercial companies that produce tons of waste every year, and on an individual who enjoys the benefits of civilization. It is a fact. Throughout the entire well-known history, humanity has developed and with its concepts of the world around have developed. Very early, people realized that natural gifts needed to be used wisely, without destroying the natural balance between man and the planet. Ecology is interpreted as a science that studies the interaction of living organisms with each other, as well as with the environment and the influence of the anthropogenic factor on it. In order to regulate environmental changes, scientists have identified the main tasks that ecology must solve: the development of the laws of the rational use of natural resources, based on the general principles of life organization, as well as the timely resolution of environmental problems. For this, environmental scientists identified four basic laws:

1. Everything is connected with everything;

2. Nothing disappears into nowhere;

3. Nature knows best;

4. Nothing is given just like that.

The sharp increase in consumer lifestyle has led to the unreasonable use of natural resources. The rapid development of scientific and technological progress, the large-scale growth of human agricultural activity — all this exacerbated the negative impact on nature, which could lead to a serious disruption of the environmental situation on the whole planet. There are a number of problems that need to be addressed not by the hysteria of Greta and the greens, or by the quotas of the Paris or Kyoto agreements, but by specific steps and technologies that can correct the situation experimentally. What should be resolved first?

The gene pool is rapidly deteriorating. For several centuries, the number of plant and animal species has been inexorably decreasing with great speed. We have already lost about nine hundred thousand species, and this figure continues to grow.

Deforestation. The destruction of forests occurs throughout the planet and even affects parks and protected areas, which are the main supplier of oxygen on the planet.

Air pollution has not spared a single country. Everywhere there are industrial enterprises, harmful emissions of air poisoning, exhaust fumes from vehicles.

Water pollution. Industrial waste also damages rivers, lakes and other bodies of water. In many parts of the world, water is not suitable for drinking.

The depletion of minerals. It is no secret that over the past decades, the number of minerals has almost halved. This threatens to destroy all resources and the extinction of energy sources.

The destruction of the ozone layer. About 30 kilometers from Earth is a thin ozone layer that absorbs ultraviolet rays. This gives us protection against many skin diseases, including oncology. There were years when scientists, as it were, could record its maximum exhaustion. Today, however, the press says little about it.

In fact, all aspects of the problems are affected by the anthropogenic factor. The state of air, water, land, and climate depends on this factor. The main thing is not focusing on the list of problems, but the very understanding of the causes of their occurrence, as well as concentration on effective ways and methods of solving them. The list of problems, in principle, is much wider than Greta Thunberg’s scandal about it. Climate agreements advertised by her do not cover the entire list of issues. The list of environmental problems concerns absolutely everyone that we all deal with every day, every second of our lives; without which life, as it is now, could not exist. Today, many international organizations advocate for the prevention of environmental pollution and aimed at solving many problems. There are many solutions, but it must be understood that, within a narrow framework, these methods do not work. Environmental issues need to be addressed by the entire community throughout the world. People should be involved in solving problems, but not a show, business or terrorist attack on the psyche and brains of people should be made out of solving problems.

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Sergiy Golubyev (Сергей Голубев)

Crynet marketing Solutions, EU structural funds, ICO/STO/IEO projects, NGO & investment projects, project management, comprehensive support for business

Human expansion: the space industrialization

June 26, 2020

Konstantin Tsiolkovsky: “Man will not always stay on Earth; the pursuit of light and space will lead him to penetrate the bounds of the atmosphere, timidly at first, but in the end to conquer the whole of solar space”.

I guess the words of Tsiolkovsky can be continued: ‘’and then will conquer the entire space of the universe ’’. Expansion is not always evil; it is, first, the evolutionary need to move forward for the survival of the species. As long as humankind has room to move — the cosmos, we only need to understand how to subdue it. The twentieth century was marked by the flight of man into space. The first steps have been taken for the practical development of near space. The spacecraft flying in the far expanses of the Universe. Now we can talk about the cosmic habitat. Humanity is already firmly exploring the cosmos. With the help of spacecraft, radiation belts around the Earth, the solar wind, the Earth’s magnetosphere were discovered, the Moon, its soil and atmosphere were investigated as well. We began to study other planets of the solar system, the Earth is zoned in order to detect natural wealth, weather is predicted, a more accurate geography of the Earth is made, satellite communications are established, ships from outer space are helped, and much more.

What does humanity expect in the 21st century? It is hard to answer this question. Forecasts are moody. In addition, predicting a cosmic future is not easy. K.E. Tsiolkovsky gave 16 stages of space exploration. Currently, astronautics is developing according to Tsiolkovsky, and we are already at the eighth stage. That is, half passed. In what areas will cosmonautics develop in the near future? First of all, we will be interested in space industrialization, which will allow us to carry out technological processes in space orbits that cannot be carried out on Earth, use the achievements of space activity in the national economy, travel to the planets of the solar system, and especially to the Moon, Mars, Venus. Where necessary we will have the technology to “breathe” earthly life into the colonization of new planets, and much more that seems absurd today, but will be traditional tomorrow.

SEC Policy: Protecting the Rich, Fighting Competitors, Presumption of Guilt?

June 26, 2020

Double standards in SEC. The opinion of Kiyosaki.

Well, how not to remember Robert Kiyosaki and his sayings about investors, investments and the SEC from the ‘’Rich dad’s guide to investing’’.

Here are just a few phrases of the rich dad (character from the guidebook) that will reveal the true purpose of such a regulator:

‘’What is the SEC? This is a securities and exchange commission. It was created in the 30s under the leadership of Joseph Kennedy, father of President John F. Kennedy. It was created for good purposes, to protect the public from unscrupulous traders, businessmen, brokers, and investors’’, rich dad said this and laughed a lot! ‘’But why are you laughing?’’ — I asked, ‘’I think such a commission is doing the right thing’’. ‘’Yes, that is the right thing, before the crash of the 1929 stock market many dark businesses and fake investments were exposed. The public was offered many lies. Therefore, the SEC was created, which was supposed to protect the public from all this. This agency helps compile and follow instructions. Without the SEC, there would be a chaos’’. ‘’So what’s so funny about that?’’, I asked. Rich dad replied: ‘’Because by protecting the public from bad investments, it also protects them from better investments’’.

It is clear from this dialogue, that SEC protects the public from the worst investments and at the same time from the best investments and projects; then what is the American public investing in? Well, based on the logic of Kiyosaki, the American public makes a normal investment. This means only those investments that the SEC advises to make. And these investments do not always mean the best investment projects, in most cases, these are just ordinary projects. This insidious control algorithm from SEC performs one very important function — this is the reason that the rich become even richer. SEC controls only for the rich, the poor and the strangers have no place there — they are limited in investment rights. And this is the irony of this regulator, which, despite the functions of law enforcement, protects the gate to another world of possibilities. People invest because they want to become richer. Nevertheless, since they are not rich, they are not allowed to invest in investments that can make them rich. Only when you are rich you can investing in investments for the rich. Therefore, the rich become richer. This is the insidious irony of the SEC.

The system is built in such a way as to protect the poor and middle class from the rich and from themselves. Because there are many more dark deeds than good ones. If a person does not realize, all projects — good and bad look the same for him. You need to have a good education and experience to sort out difficult investments into good and bad. To be experienced is to be able to understand what makes an investment good and another investment dangerous. In addition, most people do not have such experience and knowledge. Moreover, they won’t be able to have it, since the main provisions of the 1933 security act clearly indicate that only an accredited investor has the right to invest, with whom:

· The wealth is valued at $1,000,000 or more

· Has an annual income of $200,000 or more in recent years (or $300,000 family couple) and can prove that he will receive the same amount of net income in next year

· The minimum amount of money to be invested is $35,000 — the so-called value of an investment unit

The SEC is on guard for investment for the rich, but at the same time on guard against investment losses for the poor and inexperienced.

However, the SEC cannot guarantee for accredited investors to become an experienced one. An accredited investor is only one who has the necessary amount of money, but this sum does not guarantee him the experience and ability to invest. Accredited investors can only invest in projects that SEC advises them or trust their money to professional managers so that they invest their money, again guided by SEC directives. But why does the SEC limit access to better investments? What is the danger in this for the balance of the world of accredited investors? Well, the answer is obvious. The best investment in projects is a threat to the richest, why should someone from the large crowd of accredited investors be even richer, making it possible to gain investment experience in the best investments and projects.

Normal investment is a guarantee that everyone’s wealth grows proportionally (minimally) according to the traditional scheme and the proven cash flow generation algorithm. How does the SEC limit the best investment from attention? Simple — the regulator makes it possible to snitch competitors to each other. It would seem that the regulator’s good intentions of informing about alleged violations and fraudulent actions of affected investors are also used to denounce competitors with the best investment offer on the market. The regulator itself, in addition to the real prosecution of violators and fraudsters, can safely refer the project to fraudsters, which threatens the tranquility of the entire financial enrichment system. To find a reason to blame anyone — the legislative framework for the SEC allows this to be done, which, incidentally, the regulator systematically uses, filing unambiguous lawsuits against projects. In this regard, it is enough to recall the controversial claims of the regulator to a number of non-standard projects that have collected investments through ICOs. What is the basis of the SEC:

· Securities Exchange Act of 1934

· Securities Act of 1933

· the Trust Indenture Act of 1939

· the Investment Company Act of 1940

· the Investment Advisers Act of 1940

· the Sarbanes-Oxley Act of 2002

· The Dodd-Frank Act, 2010

What is SEC and what does it do?

SEC is the main government agency that oversees the trading of securities and the process of acquiring companies by purchasing a controlling stake. This is a government agency that closely monitors the activities of stockbrokers and securities traders. The Commission also monitors U.S. takeovers. In the event that a person or organization acquires 5 or more percent of the company’s share capital, they are obliged to report their purchase to the SEC within 10 days. The main function is to regulate all aspects of the issue and sale of securities by commercial organizations.

The Commission is given the right to determine the requirements for external financial statements and the accounting standards and practices of companies falling under its jurisdiction, that is, companies that issue shares on open sale and are listed on exchanges. Such companies are required to submit to the SEC annual financial statements certified by the auditor in the form of 10-K and quarterly financial reports without the approval of the auditor in the form of 10-Q. To obtain permission to issue securities, companies must provide the SEC with an issue project/program (prospectus) containing information about the company, its representative offices, and financial condition and certified by the auditor. SEC issues its own directives related to accounting regulation: Regulations S-X, containing requirements for the preparation and form of financial statements that must be submitted to the SEC; Financial Reporting Releases; Accounting and Auditing Enforcement Releases and other publications. SEC is one of the few government (state) organizations that most actively influence the development of accounting standards in the United States. The Commission works closely with the Financial Accounting Standards Board (FASB) and requires adherence to standards developed by the accounting profession. At the same time, the SEC often identifies problems arising in areas where, from its point of view, the interests of investors are infringed, and puts pressure on the FASB to resolve them. Undoubtedly, this is not the entire list of powers, but the ones already listed above are impressive. But the most important thing for the purpose of creating the Commission is to ensure effective protection of investors, increase public confidence in financial markets, as well as transparent and fair pricing in the securities markets and the stability of their functioning. SEC promotes a culture of investment and capital formation for economic growth.

Law Enforcement

The world of investment is exciting, challenging and can be very profitable. But unlike the world of banks, where deposits are guaranteed by the federal government in the United States, stocks, bonds, and other securities can fall in value. There are no guarantees here. That is why investing cannot be a spectacular sport; in fact, for investors, the main way to save their money invested in securities markets is to conduct research and ask questions. Law enforcement powers are key to the effectiveness of the SEC. Each year, the Commission files 400 to 500 civil lawsuits against individuals and companies that violate securities laws. Typical violations are the use of confidential (insight) the information obtained at the auction due to official position, fraud in financial statements and the provision of false or misleading information about securities and companies issuing them. However, the fight against securities fraud requires a collective effort. The main link in the effective protection of investors is a competent and cautious investor.

The Securities and Exchange Commission offers the public extensive information on its sec.gov website. The site also includes the EDGAR database, which contains forms that disclose the financial position of documents for filling out by joint-stock companies in accordance with the requirements of the Commission. Although the SEC acts as the main supervisor and regulator in the US securities markets, it works closely with many organizations, including Congress, other federal ministries and departments, self-regulatory organizations (such as exchanges), government securities regulators, and various private sector organizations. The SEC consists of five members of the Commission appointed by the President, 4 branches and 18 bureaus. With approximately 2,900 employees, the Securities and Exchange Commission is considered small by federal agency standards. The SEC, headquartered in Washington, DC, has 11 regional and county offices throughout the country. The SEC is divided into five departments: Division of Corporation Finance, Division of Trading and Markets, Division of Investment Management, Division of Enforcement and the Division of Economic and Risk Analysis.

SEC Information Processing Algorithm

How does the tool for monitoring and verifying incoming information work? All investigations by the Securities and Exchange Commission are conducted in confidence. The facts are studied as comprehensively as possible through informal inquiries, monitoring the media and promoting investment material, interviewing witnesses, examining brokerage accounts, reviewing data from tenders, and in other ways. After the Commission issues a formal order of inquiry, the office may induce witnesses to testify and submit bookkeeping, reports, and other relevant documents by calling the court. After the investigation, the apparatus of the SEC presents its findings to the Commission. The commission may instruct the apparatus to file a lawsuit with a federal court or bring a civil lawsuit. Individuals and companies that are accused of certain violations sometimes prefer to resolve the conflict, while others dispute the allegations. Under securities law, the Commission may either institute criminal proceedings in federal courts or file an internal lawsuit to administrative law judge. Factors considered by the Commission when deciding on further prosecution include the seriousness of the offense, the technical nature of the case, tactical considerations and the type of sanctions or whether they should be exempted. For example, the Commission may prohibit anyone from working in the brokerage industry through administrative proceedings, but an order prohibiting anyone from acting as an officer of the corporation must be obtained in federal court.

Often, when it is caused by the severity of abuse, SEC refers to both types of proceedings:

· Civil action

· Administrative action

Civil action. The Commission files a complaint with a U.S. District Court and asks the court for a sanction or remedy. Often the Commission asks for a court order, called an injunction, that prohibits any further acts or practices that violate the law or Commission rules. An injunction can also require audits, accounting for frauds, or special supervisory arrangements. In addition, the SEC can seek civil monetary penalties or the return of illegal profits (called disgorgement). The court may also bar or suspend an individual from serving as a corporate officer or director. A person who violates the court’s order may be found in contempt and be subject to additional fines or imprisonment.

Administrative action. The Commission can seek a variety of sanctions through the administrative proceeding process. Administrative proceedings differ from civil court actions in that they are heard by an administrative law judge (ALJ), who is independent of the Commission. The administrative law judge presides over a hearing and considers the evidence presented by the Division staff, as well as any evidence submitted by the subject of the proceeding. Following the hearing, the ALJ issues an initial decision that includes findings of fact and legal conclusions. The initial decision also contains a recommended sanction. Both the Division staff and the defendant may appeal all or any portion of the initial decision to the Commission. The Commission may affirm the decision of the ALJ, reverse the decision, or remand it for additional hearings. Administrative sanctions include cease and desist orders, suspension or revocation of broker-dealer and investment advisor registrations, censures, bars from association with the securities industry, civil monetary penalties, and disgorgement.

The SEC also includes 18 Offices (departments), among which one of the most famous is the Office of Compliance Inspections and Examinations (OCIE). OCIE regularly carries out thorough inspections and monitoring of stock market participants. OCIE research allows the SEC to detect cases of poorly executed or infringed securities laws. Based on the information provided by OCIE, the SEC forwards the so-called deficiency letters, i.e. notifications to the issuer of securities that the prospectus requires a review, addition or correction. OCIE reports serious violations to the Law Enforcement Division so that it can take further action to address them. Information provided by SEC reporting companies:

· registration statements for newly-offered securities;

· annual and quarterly filings (Forms 10-K and 10-Q);

· proxy materials sent to shareholders before an annual meeting;

· annual reports to shareholders;

· documents concerning tender offers (a tender offer is an offer to buy a large number of shares of a corporation, usually at a premium above the current market price); and

· Filings related to mergers and acquisitions.

Common conduct that may lead to SEC investigations include:

· misrepresentation or omission of important information about securities;

· manipulating the market prices of securities;

· stealing customers’ funds or securities;

· violating broker-dealers’ responsibility to treat customers fairly;

· insider trading (violating a trust relationship by trading while in possession of material, non-public information about a security); and

· Selling unregistered securities.

Procedure

Registration with the SEC is a key provision of US securities law. It should be noted that the SEC does not register companies. According to the Law “On Securities”, an issuer must register a transaction, an issue, and in accordance with the Law “On Exchanges”, a class of securities (Cohen et al, 2003). Securities registration is designed to protect US capital markets and all investors buying securities in US capital markets, whether they are US citizens or foreigners. Under the 1933 Law, the registration of any transaction entailing the placement or sale of securities is required, except when this type of securities is exempted from registration, or the transaction is structured using the method subject to exemption from registration. The terms “offer” and “sale” are broadly understood in US law. The company must comply with the comprehensive requirements for financial disclosure and financial reporting. Registration of a transaction results in the company falling within the scope of the 2002 Act (US Sarbanes Oxley Act20021). Requirements for unregistered transactions are much milder. However, if a foreign issuer wants to conduct a public offering of securities among retail investors, then it needs to register a transaction. To register a transaction (issue) with securities, a foreign issuer must fulfill the detailed requirements for the disclosure of financial information.

At the same time, the potential issuer is under monitoring by the SEC. Unregistered transactions are less complex, and their implementation takes much less time. When making unregistered transactions, you do not need to fill out an application for registration with the SEC. Subsequent continuous presentation of financial statements is also not required. Aligning reporting with US GAAPs (a very expensive procedure that is becoming a major obstacle for SEC registration for many companies) is not mandatory for unregistered transactions. For foreign issuers, there are three main types of exemption from registration of transactions: offshore transactions of Regulation S category (offshore placement without registration and disclosure of financial information), private placement of Regulation D category, and Rule 144A category transactions (permission to resell privately placed securities in the USA among professional investors). Regulation S and D, by the way, are very popular among crypto projects going to ICO, and less extent to IEO:

· Regulation S establishes rules by which a placement of securities outside the United States cannot be registered with the SEC. Regulatory S category securities may begin to enter US capital markets. Often Regulation S is used in conjunction with a transaction of category Rule 144A. The securities then go to the Portal e-commerce system and in this way attract the attention of analysts, securities market professionals, and institutional investors

· The SEC adopted Regulation D to exempt from registration of certain categories of issues of securities, based on the size of the transaction and the category of investors purchasing securities. The focus of Regulation D is the so-called, accredited investors: banks, savings & loan financial institutions, insurance and investment companies, corporations with assets worth more than $5 million, individuals with a wealth of more than $1 million, or those whose annual income exceeds $200 thousand, trusts with assets of more than $5 million and some other groups of investors

· In April 1990, the SEC approved Rule 144A, which allows firms to raise capital from institutional investors without registering securities with the SEC and not complying with GAAP requirements. Rule 144A permits immediate resale without registering private placements with qualified institutional buyers (QIB). The SEC concluded that certain investors are quite capable of independently understanding the information about the issuer and decide on the purchase of private securities.

Today, only large financial companies and other accredited investors operate in the market of QIB. Among them may be financial institutions, banks or savings & loan associations, registered brokers or dealers, any legal entities whose shareholders are qualified as institutional investors.

Rule 144A makes it possible not to disclose detailed financial information about the issuer, but requires the issuer to provide brief information about the nature of its business, the products or services it provides, as well as the presentation of the main financial statements for the past two years. But also in these opportunities not to register your issue, there is one danger — according to statistics, it is in this category that the SEC considers the maximum number of complaints, monitors your activities in more details (as in the investment, marketing, and PR area) and accordingly files a lot of lawsuits. The logic is simple — if you do not want to submit officially information for regulator and try to use these preferential terms, then, by a tacit opinion, you are hiding something, you have not transparent intentions to the US and its investors, maybe you are a threat to investment stability of a wealthy class of accredited investors (remember the words Kiyosaki at the beginning of the article). A kind of presumption of guilt.

Complaint Channel

SEC receives many types of complaints from individual investors, including complaints against brokers, brokerage firms, investment advisers, transfer agents, mutual funds, and other market participants. Anybody can submit an investor complaint form to https://www.sec.gov/oiea/Complaint.html to report problems with investments, an investment account, or a financial professional, including problems involving:

· Order handling, trade execution, or confirmations;

· Delivery of funds or securities;

· Dividends;

· Fees, commissions, or mark-ups;

· Inaccurate or misleading disclosures by financial professionals;

· Margin;

· Suitability, or excessive trading or other account abuses; and

· Opening, transferring, or closing an account, or redeeming or transferring mutual funds.

One also may send copies of documents, letters, and other materials one believes would be helpful in understanding complaints according to contacts on the SEC web. SEC will inform when it receives your complaint and will note the file number assigned to your complaint. SEC helps ensure that individuals and entities regulated by the SEC respond to investor complaints when appropriate. SEC may refer an investor complaint to other Offices or Divisions within the SEC, including the Division of Enforcement. The Division of Enforcement generally conducts investigations on a confidential basis. As a result, SEC will not confirm or deny the existence of an investigation and will not update an investor on the status of a complaint. SEC’s principal use of information from an investor complaint is to resolve the complaint, but the office may also share the information with other Offices and Divisions in the SEC or outside of the SEC where appropriate. Records and information may be used by the SEC or disclosed outside the SEC pursuant to 5 U.S.C. 552a(b) for multiple purposes, including to assist with SEC examinations or investigations to determine whether an entity or person is complying with, or has violated, the federal securities laws or certain rules, and civil or administrative proceedings. Federal and state securities laws provide investors with important legal rights and remedies that may apply to a dispute with an individual or entity regulated by the SEC. You can seek to resolve a complaint through the courts, arbitration, or mediation.

As you can see, the reviewed procedure has a clear algorithm for processing incoming information. However, the online complaint form itself is simple and does not require special identification for the complainant. A lot of individual information (who places a complaint) is not checked whether the person is fake or not. Therefore, the main goal of pro forma is to collect any information not only about bad investments, but also about the best (what Kiyosaki talked about in his book) investments. The best investments are competitors to normal investments. Now it should become clear what is the danger of such complaint online channel. You can add fairy tales about competitors, combine facts into a whole incompatible because the main goal is to throw off the information that will be checked. In addition, we can say with confidence (since we wrote a complaint for the sake of the experiment) that you by yourself will notice 100% that your project is already under control and under monitoring. How does it look like? It’s just that a number of unexpected organizations will become interested in your project by third parties and potential beneficiaries, some very unexpected media will be interested in you and interviewed. You will be 100% offered legal support by a number of law firms with which you didn’t even plan to interact, one will start banning you on social networks, but the most unpleasant thing is that you will begin to feel that someone is starting to block oxygen for your project.

In the worst case, if you really have sins — in such a situation, wait for news from the SEC and a warning. In the better case, if you are not lucky to become the best project — your project will be trolling, which will lead to a fall in its reputation, and further, it is already clear that the project may lose investment interest. Here, just in the last case, it is important to understand the hidden reason, and despite the problems, continue to work on your best project by taking a number of steps, including minimizing jurisdictional risks (either change the jurisdiction or limit the participation of investors from the USA, or go into dialogue and conversation with SEC, even if you were not invited there). Well, you should not forget that SEC also uses a program of whistleblowers in this channel, whose denunciations are stimulated by large payments for reporting information about the probable law violation (from 10 to 30% of the amount of a possible fine to the offender). In addition, all messages received on their website through the complaint link form are entered and stored, and then after is constant monitoring of the activities of whom they complained to the TCR System.

Instead of Output

SEC has a wider influence on the markets — it is responsible for licensing and regulating all types of exchanges, brokers and dealers in the USA, as well as any public companies. The SEC maintains transparency by insisting that banks and issuers of securities show as much information as possible to the public. In the event of a serious regulatory violation, the SEC will assist in conducting a criminal investigation. As in other countries, the SEC requires public companies, licensed traders and brokers to send reports regularly that available to the public. This helps to keep moving towards market transparency, promoting honesty as the main quality of market participants. SEC’s responsibilities also include the control of all acquisitions of companies. Any entity issuing securities, whether by mail or online, must be registered with the SEC. After registering with the SEC, the issuer, which turns into a reporting company, is required to regularly submit financial and audit reports. Unlike US private issuers, foreign issuers are not required to submit quarterly reports to the SEC. Private foreign issuers who register for the first time with the Commission may provide data on a confidential basis. “Behind closed doors” resolve difficult issues arising during registration in such cases. The closed-door procedure itself is an interesting and non-public process. However, all information must be made public before the issuer starts the Road Show or the sale of securities to investors. Foreign issuers are exempt from compliance with the requirements of Regulation FD (Fair disclosure), in addition, they do not include the requirements of Section 16 (b). So, the world of big investments is not a liberal shop and freedom, but rather a regulated process, with its pluses for the common goals of financial security and minuses — in the name of the good goals of protecting you from the world of all the same big money, this is a world of whistleblowers and TCR system. Remember the SEC and try not to tease it!

Join the chat — https://t.me/joinchat/AAAAAE84vCXg5PK-VpHADg

Sergey Golubev (Сергей Голубев)

Crynet Marketing Solutions, EU structural funds, ICO/STO/IEO projects, NGO & investment projects, project management, comprehensive support for business

Venture Investments: Features, Geography, and trends

June 26, 2020

Venture capital is a financial instrument that allows you to earn on investments in high-risk technology companies. The basic principle of VC is the same for everyone: the fund distributes capital among dozens of promising projects, recognizing that most will be unsuccessful.

But those who succeed, can more than cover the losses, but bring the investor a profit of х10 or more. Nevertheless, the volume of investment, company valuation, and preferred stages can vary greatly from region to region.

Features

Such capital is attracted by startups. Such companies have no history or collateral for a loan, so venture is becoming one of the few options for raising funds. The purpose of such investments is to leave the company by selling its stake and at the same time making a significant profit. An ideal option for an investor is the company’s (matured start-up) IPO, but it is difficult. Another way is to sell your stake to another investor at a price much higher than the initial investment or sell to a strategic investor. Venture capital is illiquid, and such investments are always very risky. The ROI (return on investment) will have to wait for 3–5 years, sometimes longer. However, with the successful selection of companies for financing, the income will be significant, which is why investors invest in such high-risk assets. Most venture capital funds are created in the form of a limited partnership. The fund has a general (managing) partner and limited partners — investors who invested their funds directly in the fund. The general partner establishes a VC firm and subsequently manages the entire operations of the fund (as a managing partner).

He personally decides what projects to invest in, organizes the investment and exits from it. But limited partners are passive investors — do not participate in such decisions, but can influence the general partner through participation in the supervisory board. The general partner shares risks with other partners and investors, investing, as a rule, from 1% to 5% of the total investment. For his managerial and investor participation, he receives two types of remuneration:

· The first is a management fee. Most often, this is 2% per year of the total fund, sometimes 2.5%, in superfunds — 3%. These funds cover the operating expenses of the VC firm

· The second type of remuneration is participation directly in the fund’s profit (carried interest). Most often, it is 20%. First, you need to return the funds to all partners who have invested in the fund, and only then, the profit is divided between the general partner and limited partners.

An investor invests in a fund, but this happens in stages. Typically, funds are received in parts, depending on the volume of the investor’s share in the fund. With this share, he participates in investments in a specific project. The general partner informs how much and when to transfer, to which project these funds will be directed, and then the investor completes the transaction. This is called capital calls. The life of the fund (and, accordingly, the period of ROI) can be 5–7 years, 10 years. In some cases, it is extended for 1–2 years more. It all depends on what the focus of the investment fund is and at what stages of the development of the company it invests.

There is a category of “evergreen” funds (evergreen). Such a VC fund uses the profit received from investments, reinvestment in new projects. The task of the general partner is to find such investment projects that can provide a profit 10 times higher than the investment in volume (10X). Not all companies really will. Usually, 3–4 out of ten projects fail; another 3–4 brings small profits and allows investors to return funds. Only 1–2 projects out of ten become successful, and it is they that give the massive bulk of the profit. In general, an average ratio of 2.5–3X is considered a good indicator of the profitability of the fund, 5X is a successful fund. Some funds show results in 10X or more. Another important indicator is annual profitability. It is calculated based on the volume of income and terms of investment. A good annual return of 25–30% is considered. There is an example when one project brought the fund a return of 914% per annum.

Investment stages

The earliest stage of investing is pre-seed, but venture funds usually do not invest at this stage. Early-focused funds often start with series seed. This is the stage when the team works on creating a prototype and launches MVP (minimum viable product), begins to make initial sales. The average round size is $ 1–2.5 million. Series A investments are aimed at achieving product/market fit. This means that the start up already has a product, there are active sales. The average size of a series A round is $ 13 million. These are the two highest risk stages, but there are great opportunities for investor earnings. The following are series B, C, D — business scaling, IPO. These are large rounds with less risk and less return on investment. To find promising projects for investment, the partners of the fund are actively building a network of contacts. Networking is based on attending a large number of specialized events. It is customary for venture capitalists to share contacts and projects. The fund always has information about good projects that for some reason are not suitable for it (for example, the fund does not work with a specific market or company line of business). In this case, partners can recommend the project to other participants in the venture capital market. The more active and competent the fund is building the network, the better its reputation, the more “passive” offers it will receive. Such a fund does not invest in projects that came from outside. Financing is received by companies that the partners of the fund have found on their own or those who are interested in any of the familiar investors or those who came to them on recommendations from their circle of contacts. Before investing in a “liked” project, the fund conducts an internal analysis and consults with experts from its network. The ability to consult with more experienced (in a particular issue) specialists is an important advantage of a developed network of contacts. Fund partners can receive a response from them within one to two days. In addition, this additionally insures against the risks of all participants in the fund.

Activity and exit from an investment

All investors can be divided into two types:

1) Passive investors. They help the company only with money and then take a passive pending attitude.

2) Active investors providing smart money. They are actively involved in the operations of the company. If this is the leading investor in the round, he gets a seat on the board of directors of the project.

To attract quickly large investments, partners collect a pool of relevant investors, which can contain dozens of names. Fund partners know how to interest each specific investor. The start-up company founders usually do not have such information, so it is difficult for them to attract investments on their own: even if the founders are ready to look for all the necessary information, they may just not have enough time, the company will go bankrupt.

The last important question is the exit from the investment. Funds are constantly looking for exit opportunities; the main thing for them is less time and more profit. You need to know not only other investors but also potential participants (organizers) of the public offering (IPO), advisers that working in certain areas. There are, for example, generic brokers; there are those who specialize in e-commerce, and so on. In each direction, you need to have contacts. You can’t just find a suitable company on the Internet, write a letter and get an IPO. Only a personal approach works here. Moreover, for this we need contacts. The built-up network of contacts is the main “superpower” of the fund. Networking determines the success of each stage, from searching and evaluating a project to overcoming crises and successfully exiting a project. Choosing a fund with a good reputation is the path to success for both startups and investors

Venture capital: USA

North America as a whole is the hottest technology market in the world. There are more than one and a half thousand-venture funds here: in 2017, the National Venture Capital Association counted 1,562 existing funds. Funds can be classified by investment volumes and investment stages. So, large venture capital funds are invested in projects that go to IPO. The US is characterized by checks of $ 100–500 million at this stage. Larger transactions are also encountered, more often with the simultaneous participation of several funds. Among the funds aimed at financing in the later stages are General Atlantic, Silver Lake Partners, and others. Another type is funds investing at the same stages, but with an average check of $ 10–30 million. This segment has a high potential for growth in returns, but volumes are more affordable. And there are a lot such funds. The most famous names like Sequoia Capital, Andreessen Horowitz and Khosla Ventures work in this segment. Large funds can invest in earlier stages. However, there are institutions that focus specifically on seed rounds and series A. This is Benchmark, First Round Capital. Separately, it should be noted the famous accelerators (Y Combinator, 500 Startups), at the level of which there are associations of business angels and angel funds. The ecosystem itself is the most active in the world. There is more capital in the US market than in other regions. At each stage, there are dozens, if not hundreds, of funds competing for promising deals. For this reason, project evaluation is usually higher. Even a project that does not yet have a finished MVP can cost $ 15–20 million due to a “star” team and a promising idea. Due to the liveliness, the market is faster. On average, an American fund spends less time on one transaction than, for example, a European one.

Venture Capital: EUROPA

The main difference between the European market and the American is that there are no participants in this market who invest $100–500 million or more. Most well-known funds work with an average check of $10–20 million and focus on series A round. Many successful seed funds as well. Each country has regional funds, but there are those who work in several countries at once or in Europe as a whole. For example, the Coparion Foundation operates exclusively in Germany. But Global Founders Capital, DN Capital, Lakestar, Holtzbrinck Ventures, and Point Nine Capital are international funds operating in Europe as well. A characteristic feature of the European venture capital market is the wider distribution of private clubs for investors, who usually work on the basis of venture capital funds. Most of these clubs are in Switzerland, Germany, and Italy. Such a club allows novice investors who do not have large sums and specialized knowledge in investing in technological projects to take part in the round. Participants invest together with the founding fund. If investing in a fund usually requires at least $1 million, then for club members the entry threshold is reduced to $ 10–25 thousand. The European venture capital market is less developed than the American one. So, according to the MoneyTree Report for the first three months of 2019 from PwC and CB Insights, in the first quarter, 1298 transactions worth $21.9 billion were concluded in North America (almost half of the world volume), and 593 transactions closed at $4,8 billion in Europe. The European market is more conservative and more fragmented. Companies grow slower, but in the process of this growth, they “burn” less money. As a result, they are faster on profitability than American ones. In Europe, funds require adjustments in such a way as to quickly begin to profit from the project.

Venture Capital: ASIA

Asia is a relatively new market: according to Blue Future Partners, 162 funds are active in the region. At the same time, the Internet population, from 260 million in 2016, will grow to 480 million users by 2020. The digital economy market will increase from $ 30 billion in 2016 to $ 200 billion in 2025. Given such an active development and growth prospects, international funds “enter” the region and local venture capitalists start to appear. Among the players who have come from the global arena or working across Asia are Sequoia, WI Harper Group, IDG Capital. A characteristic feature of the Asian venture capital market is the active participation of the state. For example, there are GIC Private Limited and Temasek Holdings, founded by the Singapore government, the Chinese Innovation Fund For Technology-Based Firms. Another feature is the active participation of corporate funds: for example, from Alibaba, Tencent, Softbank. In Europe and the USA, corporate venture is much less active. Although there are not so many funds operating in the Asian region, deals are made from time to time on the local market considered very large, even by American standards. So, starting in 2015, Grab closed several multi-million dollar rounds, and in 2017 raised $ 2.5 billion. The Asian startup and venture market is developing rapidly. At the beginning of the year, the Financial Times reported that the local venture capital market was almost equal in volume to the US market ($ 70.8 billion versus $ 71.9 billion) and would soon overtake it.

2019 Investment Interests: American market

With the constant changing conditions on world capital markets, every year investors meet new challenges. Increasingly, investors are wondering where to invest in order to save capital and not lose it and even better to increase their fortune. Today, the prospects for the global economy are rather vague. Experts point to significant growth potential and the absence of overheating in most markets, which makes a global crisis or recession unlikely in the near future. Despite this, trade wars between major players, political instability in some regions, fluctuations in oil prices and other destabilizing factors have a negative impact on financial markets as well. Therefore, according to the latest IMF forecasts, the growth of world GDP in 2019 will slow down and will add to 3.5%. The era of stability in the global economy has ended, so investment should be considered more carefully. Now, let’s briefly check the main investment trends and promising areas for investments in 2019.

Investing in the US stock market in 2019 is a risky venture. Over the past year, the main index of the American stock exchange Dow Jones fell by 7.1%, given the global instability, the negative dynamics will most likely prevail on the exchanges. Forbes analysts believe that, despite the fact that the stock market may rise in the first half of 2019 due to favorable economic factors, the high volatility on the exchanges will continue and the sharp jumps in quotes both up and down will continue. According to the reputable publication in The Economist, investing in giants such as Google, Amazon, Netflix, Facebook, and Tesla is the best investment in the US market in 2019. Such advice is relevant only for the short term, and not for a long term in advance, as the situation often changes with lightning speed.

2019 Investment Interests: European and Asian Market

Yet, most economic analysts agree on the idea that investing in the American or European market is now unprofitable. For the 3rd quarter of 2018, the EU zone economy grew by only 0.2%. This minimum figure for the last 4 years, a similar situation is in the Japanese economy. Experts advise investors to pay attention to developing countries, especially India and China. The PRC economy grew by 6.6% in 2018, and according to the World Bank forecast, by 2030 this country will become the world economic leader. First, it is worth paying attention to the Chinese IT industry, for the first half of 2018, according to Tech in Asia, the Chinese IT sector attracted investments of $43 billion, and according to preliminary estimates for the whole of 2018, this figure will reach more than $80 billion. India, with its 7.5% GDP growth, overtook China in 2018. The growth of salaries in China has led investors to withdraw their production to regions actively with cheaper labor, as India, the Philippines, Vietnam, Bangladesh and other countries of South Asia. Investors are actively investing in infrastructure projects and production in these countries. Earlier, in the study “The best countries for the location of production”, which examines the countries that foreign investors are seeking to develop or transfer their production to, these countries are in priorities.

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Sergey Golubev (Сергей Голубев)

Crynet marketing Solutions (crynet.io), EU structural funds, ICO/STO/IEO projects, NGO & investment projects, project management, comprehensive support for business

SEC: Complaint Services

June 26, 2020

Even public companies with a strong code of conduct, an exemplary tone at the top, robust internal controls, and a culture of compliance may face allegations of misconduct that can lead to an investigation by the Division of Enforcement of the US Securities and Exchange Commission (the SEC or the Commission).

A company may learn of an SEC investigation from a phone call to in-house counsel from Division of Enforcement staff notifying the company that the SEC has opened an investigation. Alternatively, a document preservation notice, voluntary request, or subpoena may arrive without warning. At other times, a public company may learn about the investigation from a third party, such as its auditors, a vendor, or a customer that receives a subpoena or request for information. Public companies should be prepared to respond to the investigation swiftly and with strategic foresight. The decisions made at the outset are frequently critical, will impact how the investigation unfolds and can shape the investigation’s ultimate outcome. The SEC begins investigations for a variety of reasons. The Enforcement Staff regularly monitors the financial markets, the internet, company filings, and news stories for information indicating that a violation of the federal securities laws may have occurred. Public company reporting and disclosure has always been an area of focus for the SEC, but in 2013, the SEC announced the formation of the Financial Reporting and Audit Task Force dedicated specifically to detecting fraudulent or improper financial reporting. As part of that effort, the SEC has made a significant investment in tools and personnel to engage in data analysis to identify potential fraudulent activity. One example of that effort is the Corporate Issuer Risk Assessment Program, also known as CIRA.

Public companies should be alert to the existence of putative whistleblowers. Particularly since the passage of the Dodd-Frank Act — which added strong financial incentives and anti-retaliation protections for putative whistleblowers to the Exchange Act — the staff receives communications from employees, investors, short-sellers, and other members of the public. Section 21F provides for a whistleblower program offering financial incentives for a person to voluntarily provide to the Commission non-public information which results in an enforcement action. Specifically, any resulting enforcement action that results in monetary sanctions in excess of US$1 million makes the whistleblower eligible for an award of between 10–30% of the aggregate monies any US regulator receives.

The SEC maintains extensive information about its whistleblower program at https://www.sec.gov/whistleblower.

In addition, Section 21F includes an anti-retaliation provision, which establishes a private cause of action for a whistleblower to sue his or her employer in federal court for any form of harassment the employee’s whistleblowing activity causes. The Commission can also take legal action against retaliating employers. As of the end of Fiscal Year 2017, the SEC had paid more than US$160 million to 46 whistleblowers since whistleblower rules went into effect in August 2011. Even if they are not formal whistleblowers under the processes created pursuant to Dodd-Frank, these putative whistleblowers may bring tips and complaints to the SEC. The SEC maintains an internal database, known as the TCR System, which includes information received through its website, from more traditional sources like phone calls and letters, and from referrals from other agencies. Any such information, regardless of its source, can be grounds for an investigation. The Division does not need probable or reasonable cause to launch an investigation, public companies do not have judicial remedies for challenging the Enforcement staff’s decision to open an investigation, and Enforcement staff has broad discretion in the conduct of an investigation.

SEC investigations are authorized by various federal securities statutes and are governed by the rules provided in 17 C.F.R. § 202.5, Enforcement Activities, the Division’s Enforcement Manual, and other Commission guidance. Investigations may be either formal or informal. In a preliminary inquiry, also known as a Matter Under Inquiry (MUI), or in an informal investigation, the staff does not have the power to subpoena companies or individuals, and relies on the voluntary cooperation of those from whom information is sought. In a formal investigation, the staff obtains a formal order of investigation, authorizing them to issue subpoenas that could require the recipient to produce documents or provide testimony. The formal order is not publicly available, but persons asked to produce documents or testify before the Commission can request it.

The Enforcement staff states consistently that SEC investigations are for the purpose of determining whether securities law violations occurred. In correspondence related to the investigation (e.g., document requests and subpoenas), the staff frequently notes that the fact of the investigation should not be “construed as an indication that the Commission or its staff have a negative view of any entity, individual or security” or words to that effect. The existence of an investigation does not mean that the staff will necessarily recommend enforcement action to the Commission. Instead, the investigation means that the staff has identified an issue that it believes warrants investigative resources. The staff can and does close investigations without enforcement action at any stage of the investigation. With limited exceptions, the SEC conducts investigations without publicly disclosing their existence, and generally does not confirm or deny publicly that it is investigating a specific company. That said, the staff may contact other individuals and companies who have relevant information about the matter, and these individuals, like the company itself, do not have a duty to keep the matter confidential.

These individuals may discuss the investigation with others, including the press. If an investigation results in an enforcement action, however, the SEC will make the matter public. The SEC will publicly file pleadings and orders related to the enforcement action and, generally, the SEC will publicize the enforcement action with press releases and litigation filings published directly on the SEC’s website. These press releases and filings could receive substantial media coverage. The duration of an SEC investigation can be difficult to predict. Typical investigations related to financial disclosures (to the extent such generalizations can be made) frequently take at least one year and often take two or more years. Investigations lasting five years or even longer are not unheard of. A company can attempt to expedite this timeline by responding to investigation demands promptly and proactively, as well as by crafting a strategy involving internal fact-gathering and legal argument to respond to the staff’s concerns.

Numerous federal statutes may be at issue in an SEC investigation. The principle federal securities statutes likely to be involved in an investigation involving public company accounting and disclosures are discussed below:

· The Anti-Fraud Provisions

· Reporting, Books and Records, and Internal Controls

When a company learns of a potential SEC investigation, the company should consider retaining outside counsel with experience in SEC investigations. A company faces a multitude of complex issues and strategic decisions, and outside counsel’s experience in dealing with the Enforcement staff is important. A company should consider several strategic factors when determining whether and when to disclose publicly an SEC investigation. There is no specific line-item disclosure requirement, meaning a company must assess the materiality of the investigation, underlying conduct, and potential outcomes, before deciding whether a disclosure is required. As a result, a company should carefully analyze the facts and circumstances developed during an investigation, determine how those facts affect the company’s previous disclosures and make materiality assessments. A company may choose to disclose earlier based on a variety of strategic considerations, including whether earlier disclosure will preserve credibility with investors and analysts (and whether that credibility may be harmed by delayed disclosure), the risk of leaks, and whether the SEC may contact customers or other third parties about the investigation.

Taking into account these strategic considerations — particularly if a company fully understands the scope of the potential misconduct — it may choose to disclose the existence of an investigation when the Enforcement staff first notifies the company of the investigation. Alternatively, a company may choose not to publicly disclose an SEC investigation until disclosure is required pursuant to a specific requirement (such as Regulation S-K), or the company learns that the staff has decided to recommend that the Commission authorize an enforcement action against the company or its officers. In any event, a company under investigation must not falsely deny the existence of an SEC investigation. However, a company may wish to consider a policy of not commenting on the existence of a SEC investigation. Of course, the disclosure of an investigation (as well as any evidence of possible misconduct or other negative facts) likely will result in adverse publicity and possible private litigation, such as shareholder class actions or derivative actions. Therefore, a company should instruct all employees who deal with the media about how to respond to questions from the press, analysts, and shareholders about a disclosed investigation. Any communications related to the investigation should take into account public relations considerations; concerns about releasing inaccurate or misleading statements; waivers of privilege; and Regulation Fair Disclosure (Reg FD). A company and its counsel should also consider whether the company should inform third parties of the investigation, including, for example, insurance carriers, lenders, customers, and other business partners.

During an investigation, the SEC often gathers information through document requests. At the beginning of any investigation, the company should take proactive steps to preserve relevant documents, which may include paper records, electronic files, and other materials. These steps should include the suspension of document destruction routines or procedures. Improper document destruction or alteration — even if inadvertent — is always a serious matter and can carry significant penalties, including fines and prison sentences. Document collection, processing, and review can be both time-consuming and expensive. Moreover, SEC document requests and subpoenas are often very broad and have unrealistic deadlines. As a result, the Enforcement staff is usually receptive to negotiating both the scope and timing of document productions. Through these negotiations, counsel may be able to extend the amount of time given for a production, limit the date range or subject matter for document requests, or even eliminate certain requests altogether. The staff may also agree to accept production of documents on a rolling basis. Also, in the event of production delays, counsel should contact the staff immediately with a status update to assure them of a client’s continued cooperation. If the SEC requests or subpoenas witness testimony, counsel will need to prepare witnesses to testify accurately and effectively.

Witnesses have a right to be accompanied by counsel during testimony, and only counsel who represents the witness can attend investigative testimony. Witness preparation requires time and an understanding of key documents about which the SEC may ask a witness to testify. The Fifth Amendment privilege against self-incrimination is available to individuals throughout an SEC investigation and civil enforcement action. Whether an individual asserts the privilege will be the decision of the individual with advice from her or his counsel, but this can have significant ramifications for the company in both the SEC investigation and in related civil litigation — particularly if a senior executive makes the assertion. Since 2001, when the SEC released its Seaboard Report outlining considerations for the SEC in evaluating whether a public company would receive credit in the form of reduced charges or sanctions for “self-policing, self-reporting, remediation and cooperation,” the SEC has emphasized the importance of a public company’s cooperation in an SEC investigation. The SEC website highlights the Enforcement Cooperation Program and the benefits of cooperation. Depending on the level of cooperation, the benefits may be significant. The SEC has been willing to agree to cease-and-desist orders, deferred prosecution agreements, non-prosecution agreements, and even “full passes” if the respondent substantially cooperated with the investigation. In most instances though, to the extent the Commission rewards cooperation, it is through the reduction of charges, penalties, or other sanctions which the staff would otherwise have pursued. Whether — and how — to cooperate is a judgment each company must make.

The Seaboard Report includes the following questions, among others, relating to these considerations:

· How did the company cooperate with the staff’s investigation?

· What compliance procedures were in place to prevent the misconduct now uncovered?

· How was the misconduct detected and who uncovered it? Did the company report the misconduct to the SEC, or did the SEC know about the problem before hearing from the company?

· What steps did the company take upon learning of the misconduct?

· What assurances are there that the conduct is unlikely to recur?

In the Seaboard Report, the Commission identified voluntary disclosure of investigative findings as a factor to consider in determining a company’s cooperation credit, but acknowledged that public companies need not waive the attorney-client privilege, work-product protection, or other privileges in order to receive credit. Deciding to share privileged materials with the SEC is a significant decision with serious potential consequences. Voluntary disclosure to an independent third party that lacks a common legal interest generally waives the attorney-client privilege, even if the third party agrees not to disclose the communications to anyone else.

Most courts have held that a company’s disclosure of privileged materials to the SEC waives the attorney-client privilege. And if the attorney-client privilege is waived to the SEC, that waiver would generally include a waiver as to other third parties, including potential civil litigants or the Department of Justice (DOJ). A waiver with respect to specific documents or information would also likely extend to all other communications related to the same subject matter as the disclosed communications. When the SEC is investigating, keeping the company’s independent auditors in the dark is almost never advisable. In an SEC accounting investigation, the independent auditors will be concerned about a number of issues, including the accuracy of the company’s financial statements (and whether a restatement may be necessary), whether they can continue to rely on representations received from management, and whether their prior audits may become a subject of the investigation. Indeed, to the extent the SEC’s investigation is accounting related, the independent auditors likely will receive a request for documents and possibly investigative testimony.

Keeping the auditors informed and up-to-date will help facilitate the investigation and ensure, to the extent practicable, that the company is able to continue to issue audited financial statements. To the extent, a company is also conducting an internal investigation, auditors often make substantive suggestions regarding the scope of document collection, search terms, investigative interviews, and fact-finding. In an investigation, independent auditors may also request:

· Details of the document collection and data processing

· Search terms for identifying relevant documents

· Interview lists

· Key documents

· Detailed briefing on facts from the document review and investigative interviews a company has conducted

· In certain cases, to conduct their own interviews

A company can minimize the risk of delay in the investigation by finding a way to provide such information to the company’s independent auditors to ensure their comfort with the investigation process while being mindful of the privilege and workproduct risks.

When a company learns of potentially problematic conduct, the company should take immediate steps to ensure that no improper or illegal conduct is ongoing and to remedy any mistakes in financial statements. The SEC considers appropriate remediation to be a key element of cooperation, and prompt and meaningful remediation can impact both whether there is an enforcement action and the scope of the sanctions. Any remediation plan should be robust and demonstrate to the SEC the company’s desire to fix any problems that occurred. Remediation can include personnel actions, and often does if there has been some wrongdoing. Remediation may also include management’s assessment of any internal control deficiencies, and management’s and the board’s plans to remedy any deficiencies to prevent the issues from repeating. Favorable resolutions come in many forms. Closing an investigation quickly without any charges, and with minimal disruption to a company’s business, is the most desirable outcome — and that does occur. Even if an investigation is extended, an SEC staff decision to close the investigation without action is still a good outcome.

Defending and cooperating with an SEC investigation is costly, and leaving an investigation unresolved prolongs uncertainty in the capital markets, — which is especially costly for a company that issues securities. A lengthy investigation can also cause broader reputational harm. If a company believes that a response to a Wells notice will not be persuasive or that an enforcement action is inevitable, the company should consider an attempt to resolve the SEC matter as quickly as possible, assuming a reasonable settlement can be reached. Even if a company seeks to settle, the staff might refuse to enter into serious settlement negotiations prior to investigating the conduct of senior officers or potentially implicated board members, because determining the level of individuals’ culpability may impact the level of a company’s culpability.

Public companies often opt to settle rather than litigate SEC cases involving allegations that the company misstated their financial condition for a number of reasons beyond the costs of litigation, including:

· Adverse findings in litigated proceedings are generally binding in private shareholder litigation.

· The SEC permits parties to settle without admitting the Commission’s allegations or findings of wrongdoing (so long as the parties also do not deny the allegations or findings), although, as discussed below, in some instances the SEC may insist on an admission.

· Settling parties can often influence the way the SEC describes the alleged misconduct. In cases of good cooperation and remediation, settling parties can sometimes arrange for positive mention in the Commission’s public releases of a company’s cooperation with the SEC’s investigation and of remedial measures a company has undertaken. By contrast, individuals tend to have a different calculus and litigate more frequently against the SEC.

Types of Enforcement Actions possible:

· Civil Injunctive Action

· Administrative proceedings before the SEC’s own administrative law judges

· Parallel Criminal Investigations

· Monetary Sanctions

Generally, the securities laws set forth two alternative methods for calculating the maximum penalty. The first method, which is applicable in both administrative and civil actions, permits a “per violation” calculation, the amount of which increases by tier based on the seriousness of the violation. The second method, which is applicable only in civil actions, allows for the imposition of a penalty equal to the “gross amount of pecuniary gain” to the defendant as a result of the violation(s). The penalty amounts available still permit the SEC significant flexibility in tailoring a sanction. First, the SEC can usually find as many violations as it needs to — for example, the SEC can charge each allegedly misstated entry in the books and records of a company as a separate violation. Second, if there is a sufficiently large pecuniary gain, the per violation amounts become

irrelevant in civil actions. The statutes are not particularly limiting in practice, and the SEC is often subject to public clamor and pressure to impose high penalties for violations of federal securities laws. Historically, in SEC settlements, parties would neither admit nor deny the Commission’s allegations, findings, or conclusions. In recent years, however, the SEC has twice amended its longstanding policy permitting a company to settle without admitting or denying the allegations in the complaint. First, in early 2012, the SEC announced that it would eliminate the “neither admit nor deny” language in cases where there had already been admissions or adjudications of fact in criminal cases. Thus, in cases involving a parallel criminal conviction, or a non-prosecution or deferred-prosecution agreement including admissions or acknowledgement of criminal conduct, the SEC will delete the standard neither admit nor deny language from the settlement documents, and recite the fact and nature of the criminal conviction or non-prosecution or deferred prosecution agreement in the settlement documents. This policy change would not require admissions beyond those already included in the criminal proceedings, and thus should not have independent effect in other litigation.

SEC resolutions can trigger a variety of collateral consequences. Each case is unique and the nature and extent of any collateral consequences will depend on the particular facts and resolution. Some of the potential collateral consequences public companies may face are set forth below:

· Impact on Other Litigation

· Public Company Disclosure Obligations

· Ineligibility to File Automatic Shelf Registration Statements

· Disqualification From Certain Offerings

· Loss of Safe Harbor for Forward Looking Statements

As noted above, historically, public companies settling with the SEC were able to resolve matters without admitting or denying the Commission’s allegations, findings, or conclusions. In addition, in a settled enforcement action, there is no adjudication on the merits of the Commission’s allegations. Accordingly, SEC settlements without any admission have no preclusive effect — meaning the fact of a settlement does not preclude litigating the underlying facts in another proceeding like a securities class action. Some recent cases, however, have explored whether any part of the settlement is admissible in subsequent litigation. To the extent a company is required to make an admission to settle with the SEC, however, that admission would be admissible and could have a preclusive effect in other litigation. This means that the company would be unable to argue a contrary position, thereby affecting the ability to prevail and the settlement value of any other litigation. SEC investigations can be complex, costly, and time-consuming. But understanding the process and pitfalls can help public company executives and in-house counsel navigate the process while avoiding unnecessary distraction from business operations. Understanding the process, risks, and strategic issues a company will face can help avoid missteps and move the investigation toward resolution as quickly as possible with the least disruption to the company, its executives, and employees.

Join the chat — https://t.me/joinchat/AAAAAE84vCXg5PK-VpHADg

Sergey Golubev (Сергей Голубев)

Crynet Marketing Solutions (crynet.io), EU structural funds, ICO/STO/IEO projects, NGO & investment projects, project management, comprehensive support for business

The magic of Content plan. Content marketing concept overview

June 25, 2020

The goal of all marketing efforts of any business is to create a customer data and interact with it to create brand loyalty and stimulate sales. One of the most effective and inexpensive ways to do this in today's multi-channel environment is content marketing. This is because, unlike paid advertising, content marketing provides the audience with something valuable, which is of great importance for building trust with any current or potential client. The hardest part of any content marketing is that it takes time. Why we need content marketing? Because good content is excellently shared/reposted, it generates leads well and expands the funnel sale much better than paid ones. The Content Marketing Institute explains the value of content well in such way beneath:

• Content marketing generates 3 times more leads than a paid search for 1 dollar spent

• Creating content is the most effective way of SEO optimization

• Every day, people share 27 million pieces of information. Your unique content can be of great interest to readers

• 80% of people prefer to make conclusions about the company based on articles and releases, rather than advertising

• 82% of consumers are more loyal to the company after reading relevant content

• Together with marketing automation, it allows you to use a completely new personal approach to the client

PR experts have a lot of experience creating exceptional content for their brands. In the digital marketing world, making the most of this content generation ability now means investing in new content marketing plans to ramp up brand awareness and cultivate customer engagement. For PR pros, the rise of content has provided countless new opportunities to communicate with important audiences and raise visibility for critical clients. Of course, as valuable as content marketing can be, it’s only effective if companies know how to use it properly. The following tips from us could help any PR agency, project team and person make the most out of their content plan:

- Use a range of different media

While the days of written press releases aren’t over just yet – there are plenty of different ways that agencies can share content with the public in the modern age. Aside from writing content, PR groups can reach out to audiences through social media marketing, video content, and images too. A wider range of media can help to earn more attention online.

- Optimize PR content attentively

To make content stand out in a world where everyone is using blogs and articles, PR pros need to make sure that they’re optimizing everything they produce. This means adding SEO strategies into their campaigns to improve their ranking with search engines like Google, as well as adding features that make the content easy to consume or share. For instance, a “share on Facebook” button at the end of an article could improve brand reach.

- Show expertise and knowledge

When people look for content online, they’re often looking to learn something. A great way for PR companies to make their clients stand out with content is to present them as a “thought leader” for a specific niche. Q&A sessions or in-depth industry articles can help a company to appear more credible and authoritative.

- Use data

Content marketers around the world are beginning to recognize just how valuable data can be to their marketing strategies. The right data gives organizations a chance to learn what their audience wants most from them. For instance, digital tools like Google analytics can help PR agents to track customer responses to certain pieces of content and adjust future strategies accordingly.

- Attract the press

In the content marketing and PR world, attracting the press is similar to hacking a target audience. It’s all about understanding what the media are looking for to fill their news pages and giving them the content, they need. There are certain content formats that are typically well-received by industry publications, and PR agents can use those to their advantage when they’re planning a brand awareness or content strategy.

- Maximize content value

Finally, since content is incredibly valuable today, it makes sense for PR agencies to get as much distance out of each piece as possible. As well as investing in the right content creation for their clients, PR groups can also multiply the content they create by turning it into different formats or looking at it from multiple angles. For instance, PR companies might interview different members of a business about a certain topic or transform a recent article into video piece or infographic.

We guess that to achieve all these things we need an algorithm for successful and useful content:

1) Set a direction – Before you start writing content, you need to understand your goals (marketing strategy)

2) Do the market research – Rely only on statistics. Often, you can learn a lot about the consumer, his behavior on the site, from which channel he came from, which sections of the site he watched, what purchases he made, how he reacted to email newsletters and much more

3) Choose your channel – Just 10 years ago there were only 10 channels, now there are 100 of them – but are they all right for you? On the other hand, is your own blog and newsletter an universal option?

4) Create useful, clickable and shared content – You create the content yourself or you have a team that is working on this, you need to know how to create content that will be useful, clickable and shared. In addition, you need to do it all the time.

5) Promote more than you think it should – Most content creators spend 80% of their time creating content and 20% promoting it. But it should be vice versa.

6) Measure and monetize – you need to understand how your investment returns in monetary terms

Algorithm for us (Crynet Marketing Solutions) is first of all clear strategy and strategic checklist to support.

Content marketing is first a digital marketing strategy in which companies create honest, transparent, and educational content on a consistent basis for an ideal buyer profile. Typically, the goal is to use the publication and promotion of content to drive organic website traffic, increase qualified lead generation, and (ultimately) empower the sales team to close more deals faster. From our practice, there are two types of clients in the world of digital marketing:

1. Those who have launched a content marketing campaign, and;

2. Those who haven’t.

If you haven’t yet, it’s likely that you either don’t know why you should, or don’t know how. If you have, maybe your campaign isn’t going all that well, or perhaps you have no idea whether it’s performing well or not. Whatever your case may be, I wrote this guide is for you. It provides an overview and the benefits of content marketing, covers how to plan your content strategy, and dives into how to launch your content strategy. So it shouldn’t come to a shock to you when we say that your business should invest in a content marketing campaign. But the problem here isn’t usually businesses that aren’t aware of the power of content marketing, or even businesses that don’t want to engage in content marketing. Instead, the problem is usually that entrepreneurs and marketers don’t know what they’re doing. They’re too intimidated to start a content marketing campaign from scratch, and even if they muster the guts to try to launch one, they aren’t really sure where to begin. Indeed! Before you can create an effective content marketing strategy for your business, you need to know exactly what content marketing is—and isn’t—and what potential benefits you could stand to gain from it. There are many different ways to approach content marketing, and many different tactics you can employ along the way, but the basic concept is the same no matter who you are or what individual strategic elements you choose to adopt. Basically, the idea is to create pieces of content (written, visual, audio, etc.) that people want to read, view, or listen to, and tie those pieces of content to your brand to build awareness, equity, and authority. Rather than directly advertising a product or service, your content will carry a value of its own to consumers, which will make your brand more visible, more authoritative, and more familiar to consumers.

Content marketing can be used by any business with an online presence. Any customer base you can imagine needs some kind of content—even if it’s just more information about a product or service. If you can provide that content, your brand will be the one those customers first engage with. Content also serves a variety of different functions, so even if your business can’t benefit from one of the functions, it can probably benefit from at least some of the others. You can use content marketing for either business to attract clientele, but in different ways. You might use content marketing to boost website so appear in more search results for people in the local area searching. The point here is that any kind of business can benefit from content marketing—as long as you have the right goals and strategy in place. You could argue that content marketing is a practical necessity for the modern age of online marketing, much like having a website in general. However, it’s certainly possible to get by as a business without one—you aren’t going to close your doors merely because you haven’t started a blog. There are still lots of businesses that are doing just fine who don’t even have a website. There are, however, real risks of not pursuing a content marketing strategy, and the biggest one is the opportunity cost. You’re going to miss out on traffic, leads, and reputation benefits—so your business might be profitable without a content marketing strategy, but how much better could profits be if you did have one? And what about your digital influence in internet era? Plus, either your competitors are already pursuing content strategies of their own (or if they’re not, it’s just a matter of time); how long will it take before their momentum starts to eat away at your market share due to inaction? Your implementation of a content strategy could actually be a defensive maneuver. Finally, don’t forget that content marketing campaigns increase dramatically in value over time, due to their compounding returns, so the longer you wait to get involved, the more potential growth you’ll sacrifice and the stiffer competition you’ll have to face eventually.

Team of the digital agency Crynet Marketing Solution will help you understand all the secrets of creating an effective content strategy.

Our contacts:

www.crynet.io

https://www.linkedin.com/company/crynetio

@id013 (telegram)

ads@crynet.io

Is she next?

June 25, 2020

Joker — The Master of the Unnecessaries: The Liberals Deserve It!

June 25, 2020

Instead of introduction

We are not going to talk more about the film; only the lazy one did not talk about it. Let’s talk about the phenomenon and the problem that the film raises for society. Moreover, there are dark sides and dirty facades, where the good and the bad mixed up and in the end, we get a rotten result. The root cause of such rottenness is frightening and does not give us a chance for optimism. I think all aphorisms that I wrapped up in the introduction push us to discuss the problems of social injustice and inequality in society, regardless of the political system or the ruling party. Nazism, nationalism, capitalism, socialism and libertarianism, and the last one, like no one else — is able to generate monsters, nothing good has given to humanity, and will ever not, because ‘’Jokers’’ will not let to do so.

The origins of social injustice

In my deep conviction, an increase in the world of social injustice carries mortal threats to civilization. This injustice is in everything — in access to education, medicine, capital, to creative self-realization, and so on, can go on and on. The disastrous combination of bad strategies, economics, and politics is, to a large extent, the basis of the fact that most people in the world do not have good health, which is biologically possible, do not have good education — which is paid and expensive, do not have self — realization in their profession — because the class and caste system has not disappeared, dividing people into friends and foes. Social injustice kills people on a massive scale, both literally and figuratively. Let’s start with the social injustice generated by the war. The traditional source of funding for military spending “of all times” is the printing press. From the point of view of the national economy, unsecured emissions are evil, but, on the other hand, inflation is the fairest “tax on war”, which is equally paid by the rich and the poor, although, without a doubt, the poor suffer much more. Moreover, everyone suffers when the printing press is associated with a loan agreement with the IMF. That is why the main source of funding for sharply increasing military spending is a sharp reduction in social programs. In this case, on the issue of military spending and the IMF, the poor pay the gigantic share of the cost of the war.

The next aspect of social injustice does not seem to be directly related to the poor: the borrowers and depositors of banks are, first, the “middle class”. However, due to the fact that it is precisely at the expense of these two categories that the authorities everywhere in the world are trying to localize the banking crisis, they are risky at changing their social status to “poor”. The next type of social injustice in the world is generated directly by liberal progressive reforms, under which the IMF provides loans. One of the pillars of these reforms is tax cuts and government spending. These two processes are interrelated, but they can be decomposed. “Reduction of taxes” involves a reduction in the tax burden on business, and “reduction of government spending” means, first of all, cutting off social programs (and, secondly, reducing the bureaucratic apparatus). That is — again, with the “mediation” of the authorities and the IMF, the poor “pay” for liberal reforms of such governments around the world.

Of course, social injustice is one of the inevitable companions of a market economy, where the notorious “social Darwinism” operates. When the one is the most capable — at the same time is the cheapest, but does not mean the most comprehensive — since ‘’they’’ will buy the one whom the system points to. However, in the present contemporary case, we simultaneously see too many types of social injustice, which in the near future may become a much more dangerous threat than just revolutionary processes. The crisis that has gripped the economic, social and political systems of most countries of the world has caused the reproduction of unfair social relations on a global scale; I think no one will argue with me! Socially unfair relationships occur when there are visible and invisible dishonest actions within society that contribute to inequality and impede social progress. Social injustice is reproduced in government interactions that arise between individuals or groups of the population, on the one hand, and public authority structures endowed with managerial or administrative functions, on the other, and is accompanied by the reproduction of violence against a person, humiliation or violation of his honor and dignity. The global systemic crisis provided fertile ground for analyzing not only mediocre governance that led to global social injustice, but also the style of political thinking and even ideology that underlies it. This is market theocratic fundamentalism, or rather fanaticism or bigotry. In a general sense, by market fanaticism I mean a violent faith in politics based on the principle of “non-interference” (“laissez-faire”) in a “free market economy” that can solve not only economic, but also all social problems. Allegedly capable! A policy of market fanaticism (fundamentalism) generates:

· erroneous beliefs or specially created myths that free markets provide the highest possible justice and prosperity in society, and any interference with the market mechanism inevitably leads to a decrease in social well-being

· aggression from people who violently oppose any government regulation and defend a completely free market, and the ideology that financial capital exalted over industrial

The current state of affairs (prevailing in the global economy on the eve of 2020) is unhealthy and fragile. Financial markets are inherently unstable; in addition, there are social needs that cannot be met by giving complete freedom to market forces. Unfortunately, these shortcomings are not recognized. Instead, there is a widespread belief that markets are self-regulating and that the global economy can flourish without the intervention of the world community. This opinion is shared by a number of world famous economists, politicians and entrepreneurs (including Richard Kozul-Wright and Paul Rayment). Market fanaticism as a variant of the phenomenon of fundamentalism has a peculiarity that, first, relates to its origin. Market fanaticism is the result of a specific process of transformation of the concept of freedom (including economic), embodied in the ideology of classical liberalism, through its neoliberal modifications, into a market dogma of a totalitarian type. This dogma is being adopted by global financial institutions and actors of globalism and is being imposed on the entire world community by methods of not only economic, but also political, and sometimes military expansion. It is known that the core of “classical liberalism” forms a set of ideas focused on such values as individualism, freedom, intellect, justice, tolerance and private property. The interpretation of these values is based on the socio-political views of prominent social scientists, who are often attributed to the founding theorists of liberalism — Thomas Hobbes, John Locke, Charles Louis Montesquieu, Alexis de Tocqueville, Jeremiah Bentham, John Stuart Mill and, of course, Adam Smith. In reality, the early liberals only wanted to force dictators endowed with absolute power to yield to the demands of freedom. The idea of the dictate of the law that the liberals dreamed of was truly a revolutionary force, ushering in an enlightened era in modern history. It played a role in the evolution of civilization, but its implementation today is already a fatal mistake. Neoliberalism embodies the ideas of the individual’s priority over society and the state, the market over planning and regulation, human rights over the power of the government and the collective. However, in practice, this was accompanied by a shift in emphasis and an increase in ideological trends. The shift in emphasis over time turned into a dangerous social manipulation, where Overton window began to influence, breaking traditions, decency, humanity, and compassion. In liberalism, the main regulatory factor in social life was individual freedom, first of all, it is rational to think and act, limited only by moral values and norms of society. In neoliberalism, the key principle was not individual, but economic freedom of individuals (business entities), which is guaranteed only within the framework of the market and its institutions.

Accordingly, economic freedom gradually pushed the boundaries of morality, finally destroying them today. In practice, liberalism meant a fusion of radical monetary principles and radical individualism, embracing the far-reaching agenda of economic and political development, which seeks to give privilege to trade and finance over labor and production, profit over morality and the individual’s colorful viability over compassion. This became possible only thanks to politicking and social manipulators. Politicians “heard voices in the air and extracted their extravagant ideas from the academic liberal philosophical writings of past years”. With their help, liberalism/ libertarianism became dogmatic and authoritarian, and its economic creed took on the character of fanatical fundamentalism, which massively around the world gave rise to severe social injustice. ‘’You are disabled, these are your problems, we did not make you disabled; you cannot earn in an open competitive market — you are selling yourself poorly; nobody needs your talent — you have the wrong talents’’! The invisible hand of the market did not pat you over the head, because it’s just that where you live in your environment, this hand does not reach, those in power hold handcuffs near them. The very theory of the invisible hand of the market perfectly opens Overton’s windows, breaking the human psyche, consciousness, discipline and erasing optimism. Neoliberal values, reduced to the fundamentalist principles of economic principles outlined above, are being introduced into the political, economic and social life of almost all states by modern institutions of globalism, which at the same time are institutions of global social injustice. Their goal is to destroy the balancing role of the state. Obviously, the idea that any manifestations of injustice destabilize society to a greater or lesser extent, is a source of conflict and social unrest, does not need special evidence. Awareness of the injustice of the existing system can be a detonator of a social explosion. And this, in turn, leads to the emergence of ‘’Jokers’’ in a society where social policy is totally destroyed. Then what happens later? The rise of terrorism and crime. The main causes of terrorism have been and remain socio-economic reasons, expressed in the greatest social injustice, which then layered on many other circumstances, and socio-economic reasons are painted in a particular political, ideological, national, religious or psychological “color”, what else more strengthens the terrorist orientation of various groups and segments of the population. The organizers of terror are not able to develop serious terrorist activities without a wide social base. And the social base of discontented groups of the population, without the necessary organization and leaders of terror, cannot deal with systemic terrorism. Moreover, the motivation of the organizers of terrorism and their social base varies significantly. The first are seeking to achieve their own geopolitical, political, economic and other personal egoistic goals, which they are covering up with the interests of the people. The second — a real improvement in their situation, which the organizers are little concerned about, but which they skillfully use for their own purposes. Therefore, modern terrorism in the broad sense of the term is not only and not so much a clash of religions, nations, civilizations, but the antagonism between terrible poverty and insane wealth. These contradictions are clearly shown in the movie ‘’Joker’’ and essentially explain the Joker phenomenon.

Joker Worldview Problems

So, what do we have in the plot of the film and how are events intertwined with our reality? Living in a schizophrenic reality, where the post-truth, post-irony, post-politics and other antisocial events rule, it is very difficult to find out a stable platform on which the individual will feel stable and safe. We considered the reasons for the appearance of unnecessary people and such a situation above, although the plot of the film does not directly blame liberalism or anyone else, but you and I, looking around on our own in real life and comparing the events of the news feed, understand what we are talking about. In life, this stamina can be of several types: internal emigration, acceptance or merger, and radical protest. The Joker took advantage of the most striking form of the struggle against the modern world — radical protest, which led to negative consequences.

On the other hand, a radical protest gave the illusory nature of freedom and significance in the eyes of an unnecessary society. Unnecessary people gave birth to a villain who became a kind of idol, imposing his morality and values. In fact, not an instrument of power and reality in general, but a weapon against them (a society of unnecessary) that shoots becomes the idol of all living or wanting to feel alive. Life does not make sense. Unnecessary people did not want to get into it, they did not call into it, and they did not like it, since their path consists of suffering. Some of them are trying to find salvation in religion, some in drugs and alcohol, some in internal seclusion, and some find themselves in judicial violence. However, as the movie, “Joker” shows, and this will be taken away from unnecessary people soon in reality as well. Market relations contribute to scientific and technological progress, and it, in turn, leads us to the post-industrial era. Despite the fact that the systems are integral, a person for them turns from a subject into an object. Here are the main points of the plot of the film:

• ‘’Your problems don’t bother anyone’’

• ‘’You’re just a tool that has worn out ’’

• ‘’ Save yourself ’’

And the vilest thing in this situation in the film is the ban on expressing painful things. Why did the Joker hate society? It is because of the lack of sincerity in him. In any situation, they use laughter and irony, which eventually become sinister. In this world of dolls and freaks, the hand reaches for the revolver, as the cold of the weapon made it feel real. Here it is — an expression of emotions in an extremely sincere form. Are you funny — if I shoot you, will it be funny too? When mirages rule the ball, sometimes bright and dangerous constructions appear that are characteristic of the postmodern era. The Joker is just such a dangerous construction, whose image shows us how absolutely ugly in form and content ideas that should have remained in the virtual space are protected with weapons. The joker is a character who has received wounds from life. And neither society, nor the essence of reality, nor the era where all this exists, could help him. As a result, terror became its platform of social stability, which not only expresses contempt for the order of things, but also tries to reveal its vices by setting its own vicious rules. But the humiliation generated by social inequality does not restore justice; on the contrary, humiliation generates evil. The Jokers take to the streets of the cities. Disorders, diseases, and in general the whole “bunch” of Joker problems are not the main point of the film, as it might seem. His problems, as revealed by the plot deployment campaign, were the result of a system created by the Gotham elite — an order that makes the gap between the poor and rich even more insurmountable, kills the middle class, and at the same time, destroys the system of social care and health care. After all, “someone has at least achieved something”. At the same time, those who have achieved aka success bashfully drop their eyes and are silent about the hand that helped them reach this success. About the hand of the market — which is actually the hand of economic gain and the availability of capital.

True, how is the situation in the film similar to what is happening now in real life outside the window? From coincidences, it becomes creepy. Too many allegories and coincidences. And it doesn’t matter which country you are currently reading this article from. The global situation is unfair and terrible. The protagonist’s problems lie on the favorable soil that has developed in Gotham for decades. The social tension resulting from screaming inequality (which, in turn, developed under the leadership of classical liberals and capitalists, which the filmmakers showed us) led to an increase in hatred that exploded as a result of unrelated events. It is definitely worth noting how the system crisis is well shown in the film. At the very beginning of the picture, we learn that garbage strikes are taking place in the city. It would seem — an absolutely ordinary event. After all, someone goes on strike daily. The same ordinary event is the killing of clerks, committed by the Joker. After all, people are killed daily. However, both trivial events for our system lead to a series of severe fractures that begin to devour the city, thereby only exacerbating its problems. It is easy enough to realize that Gotham (or perhaps the system that dominated the city) gave birth to the Joker, and not vice versa. The tension growing inside the Joker is simultaneously revealed in the city. Moral disintegration of residents, cutbacks in funding for civil servants and indifference towards residents in need of assistance. The apogee is also reached at the same time — the Joker kills the TV host on the air, and a bloody massacre begins in the city. Joker’s illnesses are Gotham’s diseases that have resulted from the indifference of others, fake news and the indifference of those in power. The film does not warn against lunatics, fanatics, maniacs, but before the system, that generates them. “Joker” is a film about absolute coincidence that can destroy a shaky house of cards of imaginary well-being. The film is about class inequality and social insecurity, which become the causes of both individual and mass protests, bringing nothing but chaos and violence. Less obvious problems include the isolation of people with mental illness, forced loneliness, and bullying, which provokes victims to get out of control acts of self-defense. Another problem is the infantilism of a society where everyone thinking only of themselves — rich and poor, happy and unhappy, healthy and sick, idealists and rioting criminals. A reflection of a society in which the vast majority pursues personal goals, ignoring the situation of others, and crushes those who are trying to live differently. In addition, the beginning of all this — the philosophy of thinking about oneself, is given by fanatical liberalism.

Joker’s message

‘’It’s time for creepy smiles ’’ — the Joker’s keynote. In my opinion, the following message may be as well: ‘’An extra card in the deck always has a chance to become the first’’. Although the action of the Joker does not take place these days, the picture reflects many contemporary problems, for example, cutting off the medical and social assistance. In the reality of the film, all circumstances literally provoke the appearance of such a character as the Joker. This is a vivid allusion to modern society, in which, it seems, more and more distraught loners are attacking people. The film makes one wonder whether these aggressors are ordinary villains or whether society itself inevitably gives rise to such monsters. The “Joker” also raises issues related to people with mental disabilities. The protagonist is being abused due to a syndrome that causes spontaneous attacks of laughter. The plot is an extra reminder that advising people with depression to “not be sad” is a useless and dangerous undertaking. The Joker wants to rip off all the masks and show Gotham his ugly face. And although the film is criticized for the justification of atrocities, “Joker” should be seen as a warning about the consequences of numerous injustices in society. The Joker’s desperate desire to solve his own problems is gradually infecting the citizens of Gotham, who ultimately organize a mass rebellion. Unleashing insane violence, the Joker kills everyone who was hostile to him or “interfered with his life” including his own mother and colleagues.

The plot climaxes when the Joker appears on the Murray Franklin show, turning an entertainment television program into bloody madness. The film finale — distraught residents of Gotham destroy the city. However, they commit atrocities not under the influence of drugs or alcohol, but in a sober mind, under the influence of the ideas and charisma of the Joker, which splashes out the chaos reigning in their own souls into the surrounding world. The Joker bares his teeth in a bloody smile — only by spilling blood, he could become happy. The movie “Joker” is uncomfortable to watch. Feverishly painful laugh. Undisguised nervous breakdown. The protagonist, due to strange habits, cannot find friends. Forced loneliness. However, in the film, there is a place not only for severe psychological violence. To defuse the situation and give the audience a little respite, humor comes to the rescue. After all, it is impossible throughout the entire film to observe exclusively the serious psychological struggle within a person, the complete indifference of others, and the depreciation of human life. The director through the eyes of the Joker mercilessly ridicules the weaknesses of the heroes and society as a whole. Man becomes nothing. He is nothing. He is like everyone else. Was born, lives, will die. Worthless existence. Conveyor. Going aimlessly to work, unwillingness to hear and listen to those who need help. Indifference and hostility to those in need. The end of the film — the nerves on the edge. The mood of all on the verge of hysteria. The main character in his whole life has not seen anything happy, bright and joyful. Miserable existence. Did the hero try to make a difference? Had tried. Successfully? Unlikely. Rotten society. A system that breaks everyone from the inside out. The hero stood out from the total nothing. He did not fit the template, fell out of the system, which then failed. Now, look at yourself in the mirror. Doesn’t it remind anyone or something? Was it scary? But in vain — now you should be scary. The message is that society is closed to the problems of others, but when, finally, it is ready to listen and hear, it is too late. Violence breeds violence. I remember the scene at the very beginning of the film, where the main character talks to his psychologist and tells her: “You never listen. Each time you are asking the same thing — how is going on, how are things at work — and you never listen”. It was so familiar. How many times do we encounter situations when a person flatly refuses to understand, does not listen to you at all, and it feels like the whole conversation is just waiting for its turn to speak out. Also, when a person is angry and hurts you if you do not agree with him. And I have the question “what to do about it?”. How to prevent such deafness to yourself, as if you do not exist? How to prevent inhumane treatment, when a person is ready to hurt others, just not to admit that he by himself is wrong? Unfortunately, the film does not give an answer, but the suggested recipe is immoral. Undoubtedly, to endure all these trials, you need to be a much stronger person than the Joker. A stronger person is a person who can:

· correctly formulate your feelings and thoughts

· communicate your picture of the world to other people

How to achieve this we will consider below.

Back to humanism

Someone may argue that since there are many controversies, such as: good and evil, light and darkness, fragrance and stench, life and death, health and illness, joy and pain, and so on, then there must be many principles. The answer is despite the fact that opposites can have different names and can be of many kinds, nevertheless, they come down to the two names — this is Good and Evil. The variety of names and species that exists beside them represents only branches developing from these two components; there is nothing in the world that these two principles would not encompass. Returning to the problem of social injustice and understanding the causes of its occurrence, these opposites play a big role. The main problem of the side effect of liberalism is the imposition of a fundamental and fanatical interpretation of the role of human abilities in society, the role of economic opportunities over moral principles, the role of the state in the system of human values. This effect was made possible again thanks to the invisible hand of the market and Overton’s windows. All basic moral and ethical principles have already been erased. In fact, no any religion is already in a position to fight the immoral consequences of liberal politics today. Although, perhaps the one should again return his attention to the origins of monotheism — to Zoroastrianism and its dogmas, if others are not able to sober up moral principles of humanity. Why do I think so? The basis of Zoroastrianism and the characteristic feature that distinguishes it from many other religions is the Doctrine of Good and Evil. In today’s world, we have lost the line between God (good) and Evil (bad). All good in the world is from the Lord, all evil is from the Devil. Good is eternal: it was, it is and will always be. Evil is not eternal, limited by time, and will finally disappear after a certain period of time, as a result of the cosmic battle of Good and Evil. So says Zoroastrianism. However, what exactly should one pay attention to? A human being is not only a direct participant in this battle, but also endowed with the right to choose freely whose side to take. The path of service to Evil is “malice, slander, atrocity” and, as a result, indulgence in sin and vice. The choice towards Good is “good thoughts, good words, good deeds”, the main of which are good deeds. Such dualism makes the followers of Zarathustra really look at this life as an arena of battle, in which every true Zoroastrian makes a conscious choice in the direction of Good and follows the chosen path to the end of his days. The path of a believing Zoroastrian is the path of a warrior who suppresses any manifestation of Evil, both in himself and around him. And nowhere, in any other doctrine and in any other religion of the world, the problem of the relationship between Good and Evil is not worked out so deeply, thoroughly and consistently as in Zoroastrianism. The question of Good and Evil is the most important in the world, but today many people consider it something outdated, excessively arrogant, inappropriately banal, boring and even indecent. Some believe that the concepts of Good and Evil are self-evident and there is nothing to discuss here, others believe that they are excessively abstract and cannot be defined in concrete terms, from the point of view of the third, such concepts generally do not exist objectively.

Even religious preachers often shy away from a detailed analysis of the relationship between Good and Evil, not to mention other teachers of humanity — the creators of their own systems of understanding of the world (such as liberalism). In the same way, from the point of view of Good and Evil, the state structure of a given country, the principles of the organization of civilization, each individual person, all kinds of communities of people and so on are evaluated. To use the terminology of many modern philosophers, the question of the relationship between Good and Evil is the main philosophical question for Zoroastrians. The main moral and ethical principle of behavior in Zoroastrianism is the rejection of any form of Evil, and strict adherence to all principles of a person’s moral and moral foundation, which are good thoughts, good words, and good deeds. The human forgot what it is to do good deeds and how to live kindly. The human was helped to forget by manipulating his mind with all sorts of liberal doctrines that propagandize strength, arrogance, and tyranny in the name of Freedom of Thought and Freedom of the invisible hand of the Market. Humans need to remember the three foundations of virtue: the Good Thought, the Good Word, and the Good Deed. Let’s remember now, before it’s not too late, until the unnecessary and offended Jokers burned civilization.

Sergey Golubev (Сергей Голубев)

EU structural funds, ICO/STO/IEO projects, NGO & investment projects, project management, comprehensive support for business

Family Offices: The opportunity to save capital and fundraise it

June 25, 2020

What are family offices?

According to a study by American expert and businessman Russ Alan Prince, three-quarters of surveyed wealthy people in the world (with assets of more than $30 million) prefer to use the services of multi-family offices (MFOs). At the same time, 85% of those participating in the study would like to organize their own family office — single-family office (SFO), if they could afford it. It is very unusual that such sentiments arise despite of standardization and automation of financial services. Today, managing your own liquidity is no longer technologically complex, and the link to the bank, as an infrastructure, is weakening. Since access to your wealth, in this case, is not only yours, but also your bank — and often you are directly dependent on its whims and regulatory panic. At the same time, additional services that were previously typical only for exclusive packages at the bank are becoming more practical and appropriate for family Offices: legal and tax advice, support for relations with partners, risk and liability management, international tax issues and compliance, as well as the search for necessary contractors and performers, administrative support. Therefore, very rich clients have a desire to have a dedicated team of specialists with whom it will be comfortable to work inside a multi-family office, and even better — their own family office, and not constantly use the services of a crowd of consultants from large banks, where today’s respect for banking and commercial secrets is collapsing, and some of them often can’t keep a secret by leaking information to regulators, the press and regulatory authorities, and even more often — information is leaked to your direct competitors.

If you ask any millionaire: “Do you want, instead of highly specialized companies that provide only financial products, to work with a comprehensive team, with an open architecture and a proactive approach to solving problems not only in the financial sphere, but also other important aspects of family life?”. Of course, the answer will be yes. However, analyzing this situation from the point of view of succession planning and long-term sustainability, we can say that MFOs have a number of serious advantages over SFO. Here is some of them:

· Institutionalization. While SFO often does not even have a legal structure — usually it is a few employees who are engaged in the main business of the beneficiary, MFOs are dedicated teams and organizations. They have built a corporate governance model, there are well-established procedures for long-term interaction with customers, the office has developed a succession plan and a strategy for working with stress scenarios.

· Lack of strict personal liaison to one client. The practice of working with wealthy clients shows that the life of the SFO does not exceed the life of the main beneficiary. Own family offices are so tailored to the personalized requirements of the Beneficiary that they cannot adapt to the requirements of the heirs.

· Wide customer base. MFO clients typically range from a few families with a wide range of assets and interests to dozens of families with a simpler capital structure. In any case, this pluralism allows the MFO team to get rich “multi-experience” both in terms of the diversity of client situations and solutions, and in working with various providers, as well as in building relationships with new customers and their families based on professionalism, and not just loyalty. In addition, such a structure is an exchange of contacts and investment opportunities within the office between its various members. Additionally, such offices have a wider client base of accredited investors for those who are looking for alternative sources to finance their investment projects and even start-ups

· Financial stability. The presence of several clients, of course, reduces the financial dependence of MFO on each of them, as well as on difficult situations that they may encounter. We see that the periods of creating private family offices or expanding them at the expense of expensive high-class teams coincide with the heyday of business. Unfortunately, during the recession, these same structures are the first to be reduced. In the case of MFO, the cost of the team is distributed among all customers. So significant synergy is achieved.

There is an entire industry in the world — wealth management. Examples include the Rockefeller, Phipps, and Pitcairn family offices. Moreover, the private Morgan Bank was the first to take the path of providing “family office” services to wealthy families (DuPont, Guggenheim, and Vanderbilt). A “family office” can be the main “brain” of a family in the process of combining assets, transferring wealth to heirs, and safeguarding family assets. Therefore, the client is provided with services for an independent analysis of all possible investment decisions and development of an investment strategy. Often in the framework of the provision of such services, trusts and holdings are created. A family office can be the main family consultant, pool of resources, organize and carry out the transfer of business from one generation to another, and represent a single contact person for the whole family to properly maintain and manage the wealth. At the same time, family offices not only solve financial issues, but also affect the social aspects of ensuring welfare, and also pay attention to the human factor. The organizational form of a family office can be very different — from one person to a company with a staff. There are currently two main types of family offices:

1) A family office as a single family office (SFO)

Such family offices provide services to only one family. Since the cost of maintaining this type of family office is quite high, a company of this type is more suitable for families and entrepreneurs with a fortune exceeding $500 million dollars

2) Multi-Family Office (MFO)

Such a family office provides services to several families, related by family ties or a common business. Each family’s fortune usually exceeds $100 million. Multi-family offices can also be created, staffed and managed by banks or trust companies.

In recent years, MFOs have become an increasingly popular platform for comprehensively serving the interests of wealthy families (High-Net-Worth Families) in relation to the most optimal legal structure of client corporate structures with the aim of their full protection, effective management, possible alienation or transfer to the next generation, tax optimization and distribution of dividends to the ultimate owner with guaranteed protection of his name from public control. This platform gains particular significance when the issue of maintaining a family business, which has become problematic or not entirely viable for some family reasons, came first. For example, if the next generation chooses another profession or occupation. In this case, the use of MFO structures and tools allows managing family assets in the long term and provides balanced solutions between the individual management of the manager and the ultimate control of the beneficiaries from an investment point of view. Today you can still see the following classification of typical family offices:

· Class A. Their employees specialize exclusively in finance and real estate.

· Class B. The role of specialists is played by banks and consulting companies, therefore it is not surprising that their specialization is finance.

· Class C. Medium-sized law offices help their clients conduct real estate transactions.

Benefits of the MFO format

Wealthy families are increasingly interested in the solutions and tools by the MFO, which provides both traditional investment services and a full range of services for all family members. Today, typical wealthy families are globally connected and active, very mobile and have access to the best consultants at any time. Families are turning towards a more mobile, individual, but nonetheless comprehensive model of using MFOs as a structure for coordinating, controlling, consolidating and supervising all financial and non-financial assets, as well as family actions. MFOs, in particular, must adapt too much higher requirements from different families and take into account the requirements of future generations. To traditional services such as investment advice, asset management, and trust services, family offices provide the following additional services:

· Concierge services;

· Acquisition of yachts and small aircraft, as well as their management and administration;

· Purchase of art at auctions;

· Organization of exclusive tours;

· Search, purchase, and administration of luxury real estate around the world;

· Advising and securing residency and economic citizenship in selected jurisdictions;

· Selection and organization of school and university education for family members, etc.

· Exploring the possibilities of venture offers and identifying start-ups or venture projects that could potentially give X in the short term

· Diversification of the family investment portfolio by projects with a long-term stable financial outlook

The classification of requirements and challenges for a family office is a complex and unique task. Accordingly, for each individual family, there is a unique list of requirements, solutions, and approaches. Of course, every manager and every generation of the family puts their own meaning and solves the issue of proper control and management in their own way. New generations of family members are well educated, intelligent, financially visionary, technically prepared, mobile and proud of their heritage and origin, while attracting the same experienced and educated consultants. When deciding on the services of a family office, the following aspects must be kept in mind:

· Does this family need a family office to create it from scratch or use the services of the MFO;

· What type of family office is best;

· In which jurisdictions it is best to create a family office

Usually, the need to create a family office arises when:

· the family (cartel) manages and is ready to invest assets in excess of US $100m;

· assets are complex and consist of several classes located in many jurisdictions of the world, which increases their mobility;

· the family consists of many members and several generations living in different countries of the world;

· requires highly specialized and highly individual approaches to solving current issues;

· The family prefers to rely on a narrow circle of specialists and consultants, but is ready to be open to the polarity of opinions and accepts different points of view in decision-making. It has the ability to listen to opinions and is able to make its own unique decision based on various expert findings.

It is also extremely important to know the following nuances about relationships among family members when you, as an expert, work with family offices:

· Who is potentially more likely to be an opponent or supporter when discussing and making decisions?

· Is there a dominant figure in the family that usually gives instructions and directions?

· Whose interests dominate when making a decision — a dominant figure or the whole family?

When the question of transferring family assets and wealth arises before the family as a whole or each of its members individually, the following are key questions:

· What does the family need with respect to long-term wealth-raising projects, ongoing payments, and hiring professionals?

· Is there room for a common approach, taking into account an increase in the number of family members and, accordingly, an increase in the diversity of approaches diversification?

· What responsibilities will each family member have in relation to past, current and future generations?

· What do experts recommend for a long-term perspective, what investment opportunities should you pay attention to, what investment risk is acceptable for a family?

Family Office Options

With regard to the territorial location of the family office, as well as its activities, the following factors will play an important role:

· Proximity to family members;

· Politically stable territory;

· Politically neutral territory;

· Territory with multicultural views;

· A stable and profitable legal system with the ability to use many legal and tax instruments.

However, for almost all families, there are general parameters and requirements:

· Specialized and individual approaches to solving problems;

· Decrease in volumes of complexity and managerial levels;

· Access to a wide selection of specialists, services, and capabilities;

· A consolidated point of view based on a practical and balanced analysis of the situation by the experts involved;

· Management based on a high professional approach;

· Cost reduction and emphasis on high efficiency;

· The principle of “Advocatus Diaboli” for the family;

· Planning the most efficient transfer of family wealth to future generations;

· Family cohesion — written and unwritten rules of conduct in the family;

· Family values, control, and philanthropy.

Currently, in Europe, families with centuries of tradition and business experience are in transition from a traditional approach to professionally managed family offices. The new generation, combining technical knowledge and financial entrepreneurship, is a new formation of private clients. They are much more demanding and want much more involvement in the process of making tactical and strategic decisions. Such clients usually have huge assets in the form of stocks, bonds, companies or real estate, but are limited by periods and access to free financial resources. As a result, they are usually constrained in the use of liquid funds, and require access to a wide range of non-investment services. Those asset managers and private consultants, who are mainly focused on traditional investment products and have gaps in modern technological knowledge and approaches, are not ready for the current level of competition in this market of services and the new requirements of private clients. The same principle applies to knowledge about the use of alternative tools and sources of investment, and knowledge about new investment, consumer and innovative trends. Accordingly, those who are looking for investments from family offices should understand that while the employees of family offices have a conservative view of the tools and projects that are worth investing in, as the priority is the safety of the welfare of the client and his family, guaranteed income, minimal risks. However, the possibility of Xs is also attractive to family offices. In such cases, you, as a businessman who is interested in a family office — as an alternative tool for fundraising your project, should have in hand recommendations from people who have business relations with families from family offices, their managers. You need to work out your quality and more detailed project and presentation documentation, to approach this issue even more thoroughly than to negotiations with the bank on credits. The diversity of the family office models comes from the fact that, despite the common platform of basic requirements, each family, at different stages of its development, requires an individual approach and needs different market tools and solutions. This fact clearly emphasizes the current trend of transforming some offices in the direction of a private family office. Accordingly, unconventional financing and views on methods of increasing wealth today have a place even in a conservative institution such as the Family Office.

Family Office Jurisdictions

British Isles — Guernsey Island

Guernsey is widely known, first of all, as a reliable and stable offshore territory with English law, which provides services in the areas of fund management, subsidiary insurance organizations and investment management. Typically, Guernsey is used by family offices as holding jurisdictions to coordinate and effectively manage family assets and investment products. The main factors determining the placement of a family office in Guernsey are:

· Political, economic and financial stability;

· Independence of jurisdiction and decision making [Guernsey is a unique example of government. At the same time, it is both a territory dependent on the UK and a state with its parliament, legislation and currency system];

· Zero tax legislation in relation to non-residents;

· Proximity to world financial centers (London, Paris, Frankfurt);

· Jurisdiction is not part of the EU and, therefore, is not required to comply with any EU directives;

· English law and the ability to use various trust and stock instruments

Recently, there has been a steady demand from wealthy families for trust services regarding the establishment of private trust companies (PTCs). This form of company is created specifically for operating as a trust for one or more families. In this case, the principal with the help of PTC can create and effectively manage his own trust. In the event that the PTC services are unsatisfactory as a trust, the principal can easily appoint a new trust. I would like to note one nuance, in the case of the implementation of PTC trust services for a large number of customers, this company will need to obtain a license to provide trust services from the regulator. In 2008, Guernsey introduced innovation in its legislation regarding purpose trusts. This form allows you to create a trust for a specific purpose and, at the same time, not have beneficial owners. As an example of a trust, you can indicate the possibility of creating this type of trust for the acquisition and ownership of a specific stake in a particular company/instrument. This allows you to separate the ownership of PTC and family, which is extremely beneficial for the family business. Now, Guernsey legislation allows the use of such forms of organization of family offices as cellular or non-cellular, organic partnership, general partnership, trust or foundation. Another very popular form of family ownership and asset management is the protected cell company (PCC). Despite the fact that equivalent structures exist in many jurisdictions, including the Cayman Islands, BVI, Mauritius, and Jersey, this form was first developed conceptually and introduced into the current legislation in Guernsey. PCC is used mainly for managing various investment platforms, subsidiary insurance companies, a wide range of structured products and, of course, managing family assets. Moreover, legislative innovations in 2006 made another new form of company — incorporated cell company (ICC). This form of companies further increases the flexibility and effectiveness of management by creating the legal possibility of separating ICC from the holding’s target structure and acquiring the status of a fully independent company. This allows you to disclose, identify and transfer the assets necessary today from the general structure of the family’s assets.

Switzerland

Over the past decade, large Swiss banks have offered various forms of family office platforms along with traditional ones such as investment management, consulting services, long-term asset planning, philanthropy and practical training for the next generation. However, in my opinion, over the past 5 years, the legal, financial and economic situation in this jurisdiction has changed dramatically. I do not agree with those consultants who continue to position Switzerland as a paradise that provides reliable and confidential services in the financial sector. Switzerland adopted a law on bank secrecy, which guarantees confidentiality of information on deposits in Swiss banks, back in 1935, but its effect today is a fiction. It is enough to give an example of the unprecedented US pressure in 2006–2009, because of which the Swiss bank UBS, one of the first in the confederation, revealed 4,500 personal files of its depositors and paid US $780m. In 2008, UBS customers closed accounts worth more than CHF220bn. Another Swiss bank Credit Suisse in 2011 informed the US Department of Justice about the accounts of 130 people and their assets worth more than US $ 3bn. Similar investigations had previously been launched by the US Department of Justice regarding HSBC’s Swiss affiliates, as well as Julius Baer and Basler Kantonalbank. The same happened in relation to a number of European countries (Germany, UK, Austria). The Rubik Agreements, in force from the beginning of 2013, oblige Switzerland to report for its foreign investors to the tax authorities of the countries that have signed this agreement. The question concerns mainly tax residents of partner countries who have not declared their accounts with Swiss banks. Confederate banks fulfill their obligations to the tax authorities without naming their customers. The Rubik model provides, in addition to the above scheme, another option for “disclosing all cards” to the authorities of partner states. The total amount of funds “open” to the tax authorities of customers, according to the Swiss financial institutions, is CHF6.4bn. Unexpected and extremely unpleasant for the reputation of Switzerland was the situation with the bankruptcy of the oldest Swiss bank “Wegelin & Co”, which was founded in St. Galen in 1741. In April 2013, he declared bankruptcy. The US government played a key role in this matter. Also October 15, 2013. Switzerland, without drawing too much attention, has signed the Organization for Economic Co-operation and Development (OECD) Convention on Mutual Administrative Assistance in Tax Matters. This is another blow to bank secrecy, which is no longer fully respected. This document provides all forms of cooperation to combat the transfer of capital abroad for the purpose of non-payment of taxes: information exchange, simultaneous tax control, assistance in collecting taxes. The Convention “prepares the transition to an automatic exchange of tax data”, which is introduced in 2015. Thus, one can ask about the very possibility of Switzerland to remain a popular and effective center for managing assets and wealth of families.

Singapore

Taking into account stagnation, volatility and slowdown in economic growth in Europe and the USA, Asia is becoming the most attractive wealth management market, and Singapore is one of the leading world centers, consolidating all the advantages of rapid economic growth throughout the region and offering a wide range of flexible financial and legal instruments. Despite the fact that, in managing assets and wealth, Singapore law allows for the application of a wide range of legal structures, including wills, special powers of attorney, insurance agreements, offshore companies, and funds, trusts are undoubtedly the leading ones. The trust is a relatively new and little-known legal form for many Asian private clients who are not familiar with the Common Law system or the concept of trust. In accordance with Singapore law [The Trustees Act, Cap 337], a trust is a legal agreement of the parties, not a separate legal entity, and provides that trusts must be the owner of all trust property and enter into any agreements on behalf of the trust created. Trust is endowed with special obligations and is obliged to act exclusively in the interests of the beneficial owner and in accordance with the terms of the concluded trust agreement. Professional trusts should only provide services after obtaining a license for this type of activity at the Monetary Authority of Singapore (MAS). The trust may be revocable or irrevocable with a clear indication of the beneficiary. The founder of the trust (Settlor) may retain some authority to manage the trust after its creation. In a trust agreement, Settlor may specify any criteria for trusts to include additional “desirable” beneficial owners, the order in which dividends are received and exclude “unwanted” beneficial owners, and also provide the right to trust to determine specific amounts for subsequent distribution between beneficiaries. As a measure of additional control and monitoring of trusts, Settlor may designate a Protector. In addition, Singapore offers other attractive legal solutions for private clients. For example — Singapore Foreign Trust. This tool was created specifically for the national tax system and eliminates the use of income tax and income tax [Regulation 2A of the Income Tax (Exemption of Income of Foreign Trusts) Regulations (Income Tax Regulations)]. Mandatory key conditions of this type of trust is the absence of Singapore citizenship or residence with Settlor and the beneficial owner. In the case of companies, this company must be a foreign legal entity whose beneficial owners are not citizens or residents of Singapore.

Family offices as investors

The industry of family offices, as an alternative investment tool, is rather narrow, because there are about 4000 such institutions in the world. In the standard version, the family office offers direct and portfolio investments in real estate, business projects, and securities abroad. Particular attention is paid to strategies for investing in value and searching for undervalued assets. In terms of risk, family offices work in three areas:

· Conservative strategies to protect family capital (2–4% per annum) — for such investments they recommend clients to spend up to 70% of the capital of one family in management

· Investments with moderate risk to increase the profitability of the investment portfolio (from 4% to 28% per annum, for some projects more) — for such investment projects, family offices recommend to allocate up to 20% of the capital of one family in management

· High-risk investments in innovation, start-up projects, venture projects (from 20% to 200% per annum) — for such projects, offices recommend that customers allocate up to 10% of the capital of one family in management

In most cases, it is clear that the financial services provided by such family offices do not go beyond managing customer accounts and their investment portfolios in private banks, but there are a limited number of family offices specializing in other types of investments, including club deals, co-investment, impact — investing and investing in private capital. Experience has shown that in these types of investments, offices are often more active. Now in more detail, through which tools you can attract the capital of family offices (within the framework of the legislation) into your project:

Business — angel investing

Carry out at the earliest stage of the investment cycle. Usually, the capital necessary for the project is provided (more often, start-up) for additional research, the creation of a prototype. Since angel investments are made in the early stages of a business, in the startup phase, the amount required for an investment is often not that big. Nowadays, when a growing number of young entrepreneurs are focusing on new technologies with potentially high returns, this type of investment from family offices is becoming a trend. Here, an angel investor usually seeks to get a share in the company’s capital or a debt that can be sold at a high price if the new business is successful)

Club deals

This is an investment in private projects (companies), carried out by the combined efforts of several investors. Such several investors may be members — clients of one multi-family office, since investors from such an office tend to form a syndicate among themselves in order to gain access to the results of a venture investment project or to a larger transaction.

Co-investment

This tool comes with a professional accredited investor (clients and members of multi-family offices). At the same time, investment can be in assets of different classes, including private business, real estate, hedge funds, and start-ups. Unlike club deals, when co-investing, the main investor is clearly identified, taking the lead and making the largest investments in the project. The attractiveness of co-investment is that behind a large investor in the pool you can always attract additional capital by attracting second-tier investors from the same members of family offices.

Impact — investing

It is carried out not only for the sake of obtaining financial income from family assets, but also for the purpose of a certain social impact on society, stimulating one’s image and goodwill of the family. This means that such investments have additional tasks. Usually environmental or social that the investor is trying to solve. However, unlike philanthropy, the goal here is to return the invested amounts back and with a profit. The principle of impact investing is more often like microfinance. These are projects aimed at improving the environment, medical research, and the development of sustainable energy sources. The trend of recent years that family offices are increasingly becoming drivers of such investments, where the young generation of wealthy families, using this tool, begins its operations. Therefore, it is possible for your project through family offices to attract the attention of the younger generation through small amounts and collect the necessary amount for the project, if, in addition to profit, you prove the social viability of your investment idea.

Investments in private business and projects

These are mainly investments in existing companies and projects whose shares are not yet traded on the stock exchange, but an IPO is planned in the future. Investments in private business are made in the form of investments in shares or by providing financing (private debt). Often the purpose of such an investment is to seize a controlling stake in the company. Family offices, for the sake of diversification and risk reduction, often through investment companies or through private equity funds do such operations. The purpose of the family office is to generate a long-term stable income for the family in order to enter an IPO and then sell such a business.

Real investment

These are direct investments in assets having a material form, for example, the purchase of land, farms, and production. Real investments are made in tangible objects where investors can see with their own eyes what they are investing in. If your business and project have such real properties (asset, production), then family offices can be your investors, although not all of them specialize in such operations.

Venture investment

This is an investment in companies and projects at the start-up stage. Recently, family offices have been showing more and more interest in such projects, especially in the field of IT (boom of blockchain projects), AI, pharmaceuticals, biotechnology, and robotics. It is worth noting that according to statistics, all the technology projects and companies popular today such as Facebook, Uber, Airbnb, Twitter in the early stages for their development attracted significant venture investments from large single-family offices, despite all the conservative prejudices associated with these institutions. Crunchbase has reviewed recent investments made by family investment offices (https://news.crunchbase.com/news/charting-adoption-direct-startup-investments-family-offices/). It was found that the growth rate of transactions with these private groups that invest on behalf of one rich family (and sometimes several) are significantly ahead of the investment pace of traditional venture capital firms. There is some irrefutable evidence that many family offices make their first investments directly in startups (as opposed to investing in a venture fund as a limited partner). However, it would be interesting to know which investment groups are most active in investing in startups. In addition, which ones are the most successful? This study shows some interesting facts and names a number of family offices that can consider your venture and innovative investment project with great interest:

· Omidyar Network — is the most active in this activity. The Omidyar Network portfolio is represented in education, information technology, and the fintech industry.

· Kapor Capital is led by the founder of Mitchell “Mitch” Kapor and Freada Kapor Klein, the investor, and founder of the ProjectInclude project. Many of his portfolio companies focus on mobile devices and services, education and healthcare. Kapor Capital has many successful examples, one of which is Uber’s startup back in 2010.

· Webb Investment Network — made venture investments in companies such as Okta, Zuora, Hipmunk and Indiegogo, although the company currently makes less publicly disclosed investments (compared to a couple of years ago), but the fund is still active and is developing its partnership network.

· J. Hunt Holdings — invests from $100 thousand to $1.1 million in the early stages, mainly working with startups in five main categories: video, data center management, social media, data security, and “other” sectors.

· Hedgewood — invests at various stages in a diverse group of companies, primarily in the field of healthcare, SaaS and financial services.

· Cameron and Tyler Winklevoss — is the only company on this list that has invested in bitcoin and blockchain. In 2017, the company participated in initial coin offerings (ICOs) for Filecoin and Blockstack startups. Tyler and Cameron are also co-founders of Gemini, an exchange platform for bitcoins and other assets.

· Bezos Expeditions — invests venture capital in the initial, early and late stages of startups from a wide variety of sectors. Previous portfolio companies include Workday, Twitter, JunoTherapeutics and media company BusinessInsider. The company currently invests in companies such as GRAIL, Convoy, PioneerSquareLabs, Domo and Rethink Robotics.

· Iconiq Capital — invests the capital of a large number of senior executives of Silicon Valley. According to Forbes and The Wall Street Journal, Makan’s customers include Mark Zuckerberg, Sheryl Sandberg, Jack Dorsey, and Reid Hoffman. Interests in various sectors of the economy

· The R-Group, LLC — the firm’s portfolio is also rather aggregated by sector, but usually invests in SaaS or e-commerce companies, many of which are located in the Northwest Pacific Ocean. Previous portfolio investments include PracticeFusion, Notion, BillGuard, and FaradayBicycles.

· Smedvig Capital — makes investments in the Series A and B stages, and she often invests in companies in several consecutive rounds. Their portfolio companies are almost exclusively based in the UK and Scandinavia.

All these family offices are known for innovative interests and are boldly considering startups. In fact, contrary to conservatism, these institutions are at the forefront of technology and innovation. First, the families whose capital these family offices managing are quite wealthy. They realized that technology startups, attracting younger generations, would eventually start making big money. Therefore, in addition to the activity of venture capital funds that have already become traditional in the venture industry, you should pay attention and start contacting with family offices.

Sergey Golubev (Сергей Голубев)

EU structural funds, ICO/STO/IEO projects, NGO & investment projects, project management, comprehensive support for business

Join the chat — https://t.me/joinchat/AAAAAE84vCXg5PK-VpHADg

New Old Token Offering options — Reg A+

June 25, 2020

What is a Reg A+ Token Offering?

Historically, companies raise funding through public (stock market, available to all) or private (high-amount investments from accredited investors, called Regulation D) means. That dogma has been changing. In 2015, the SEC passed “Regulation A+,” a rule that makes certain securities offerings exempt from registration, in order to facilitate capital raises for smaller U.S. and Canada based companies and startups. Reg A+ offerings allow companies to raise money from both accredited and unaccredited investors, democratizing their investing sphere greatly. There are two major ways of Reg A+ offerings concept:

· Tier 1 allows companies to raise up to $20 million in one year, with fewer regulatory requirements on the company and more flexibility about who can invest

· Tier 2 allows companies to raise up to $50 million in one year, but the companies are subjects to more regulatory requirements, including disclosure and public financial reporting requirements, and includes limitations on how much certain investors can own

Both tiers place restrictions on the amount of secondary selling that can be done by company affiliates. Reg A+ offerings might be suited for companies seeking mid-stage investments that want distance from institutional investor control over the company, and deeply care about customer engagement and support. The offerings aren’t as well-equipped for really early, seed-stage investments, companies with unclear value for customers, and the inability to hire effective lawyers or advisors. Blockstack and YouNow are two companies that have received approval to do Reg A+ offerings through the SEC. Both plan to launch a token that rewards its users for customer engagement and allows for the public to participate in fundraising; early indications show that the Blockstack offering will be promising and successful. With the advent of tons of innovation within technology and blockchain, up-and-coming companies are looking for new ways to raise capital to fund their growth. Historically, investing in new ventures has been limited to institutions and “accredited investors” — wealthy Americans who had enough assets to hedge the risk of a questionable investment in a new venture. But the investing world is constantly changing — and more and more startups are looking for ways to get the general public involved in their financial growth.

What is the model of raising funds?

When raising funds, companies have two options: public and private investing. Traditionally, public investing has been executed through the stock market. Once a company reaches sufficient size and scale, they decide to undergo an initial public offering (IPO) where they list their stock on a public exchange, allowing anyone to purchase stock in the company and support it. Buyers are rewarded through dividends, or fractions of the company’s revenue, and through price fluctuations in the stock market that allow them to trade their portfolio for profit. Companies take the investment from their buyers and put it towards growth and funding new products. Stocks historically have also been a financial instrument for the wealthy of America, but recently, more average Americans have started investing in stocks too. The rise of public information regarding the stock market and how to get involved plus easily accessible platforms like Robinhood or Republic have made public investing truly public. Private offerings are when companies sell shares of the organization to accredited, wealthy investors. Generally, these shares amount to a much larger fraction of the company than a singular stock would. This gives private investors more stake in the company. Private offerings are generally seen as a lot riskier. The US Securities and Exchange Commission (SEC) has an offering called “Regulation D” that allows companies to raise private capital without officially registering the shares as securities with the SEC. The process involves filing several disclosure forms and ensuring compliance with various states’ corporate sales laws.

What is Regulation A+?

In 2015, Title IV of the JOBS Act went into effect without getting caught up in the specifics of the legislation, this expanded an existing regulation to allow for a new type of offering, commonly called Regulation A+. Regulation A+ allows companies to raise up to $50 million in capital from the public without a formalized IPO. Regulation A+ offerings still require that companies file with the SEC and get approval, but the restrictions and associated filing fees are significantly less than those for IPOs, meaning it’s much easier for companies to publicly raise capital with a Reg A+ offering. In fact, it’s like mini IPO because it functions similarly to an IPO without a formal launch on a stock exchange. And unlike Regulation D, Regulation A allows companies to accept investments from both accredited and unaccredited investors, diversifying the populations that are able to invest in such ventures. Importantly, securities sold pursuant to Regulation A are immediately freely tradeable as compared to securities sold pursuant to Regulation D which must be held for at least a year before they can be transferred by the purchaser.

What are the specific Reg A+ offerings, and how do companies go about starting one?

There’s two main Reg A+ offerings: Tier 1 and Tier 2. They’re pretty similar, aside from a few key distinctions.

Tier 1 maxes the amount of capital raised at $20 million — with this lower ceiling, it comes with less regulatory requirements. There’s no regulations on who is allowed to invest, and it doesn’t require a formalized audit from states nor public audited financial reporting. However, when filing for a Reg A+ Tier 1 offering, companies must also be reviewed by the state where they intend to raise capital in. In essence, Tier 1 is more comfortable towards companies targeting smaller investments (under $20M) who want more flexibility with how they raise capital.

Tier 2 allows companies to raise up to $50 million, considerably more than Tier 1. But naturally, with this higher ceiling, it has more restrictions for the companies. First, unaccredited investors can only invest up to the maximum of 10% of their income or net worth, whichever is higher. The company is exempt from Blue Sky Laws which require separate registration and qualification in any state where the company intends to raise funds, but their financials must be audited, they must file annual, semiannual, and current event reports, and they have to annually report their financial documents to the public as well as other ongoing disclosure obligations. Tier 2 has more restrictions, but allows for a much larger capital raise (up to $50M). At a very high level, the steps to launch a Reg A+ offering for both tie are as follows:

· First, the issuer files a Form 1-A with relevant information on their company and what they are planing to pursue with the SEC.

· After filing, companies are allowed to test the market to gauge their probability of a successful capital raise; Supposing the investor interest is there, the company then decides to actually pursue a Reg A+ offering the issuer continues with the approval process with the SEC.

· Once all of that is done and the SEC returns approval and qualifies the offering, the company can begin selling securities according to their Tier’s regulations.

Why might companies pursue a Reg A+ offering today?

A few points. It just broadens the investing pool significantly. It can be hard to convince accredited, institutional investors to take a bet on a venture, so by allowing non-accredited individuals to also invest, it widely opens the options for a company in terms of successfully raising capital. Additionally, a lot of companies end up with different visions of their future compared to their institutional investors. This can create many problems later on when the company and its investors disagree as to how the company should pivot (if they even should) and what markets they should go after. It’s a fantastic way to engage with customers. First, Reg A+ offerings essentially require that companies have robust, well prepared value propositions that they can deliver to literally anyone. It’s no longer about convincing people that a specific business model or a specific feature can create 10x returns; it’s about showing people that they’ve made a product that meets a genuine need in people’s lives. This inherently means that Reg A+ companies are more inclined to be customer focused and obsessed on fostering real future value. Second, it’s a great way to propagate the customer ecosystem. If a customer buys products from a company, realizing how great they are, and then decides to buy a share of the company to support it, they’re essentially supporting the ongoing growth of the company. It’s incredible if the company is able to reward customers for that kind of ongoing support, creating a cycle where customers are highly engaged with the company in terms of buying more products and funding new ventures. It’s a great model for mid-stage companies. For companies that are just making it big in the market, and have already pursued a traditional seed round and aren’t really ready for the big seeds money yet, Reg A+ is a great way to raise just enough money to take the company to the next level without getting excessively caught up in investor relations. Delete substantial source of capital that really allows the company to do the most with their money in a way that can gear them up for larger institutional investments later on.

What about some reasons not to do it?

It can be expensive. Institutional investors generally have their own lawyers that they work with to make investments a reality; hiring the right lawyers to get SEC approval and deal with all of the regulations might be too costly of a step to get companies interested in the Reg A+ model. Additionally, such approvals can take 3–6 months to close, which are critical time periods in a company’s early stages, and would increase company obligations to more investors, which can great tangles for the company’s vision and drive. There might not be sufficient interest for the general public to take a bet on the company, or maybe the public doesn’t know enough about the problem space, so the company might not raise enough money. Institutional investors can direct you towards a better value proposition and might understand the nuances of a company’s market and see where the 100x returns can stem from in the near future. Less experienced public investors may not have the same acumen, which can make it hard for more out there companies to raise funding and create risks that investors unfamiliar with the company seeking a quick profit could sue the issuer. If you’re still seed stage as a company, the amount of funding from a mini-IPO would greatly exceed what you’re looking for. Generally, these campaigns target investments on the scale of $3–50M dollars, even though the investor market is diversified to include the general public. This is more useful for mid-stage and later-stage companies looking for continued investment. To get a company or product off the ground, companies aren’t looking for that scale of funding; an institutional investor with a smaller amount and the wisdom to mentor the company might be a better fit here. Managed a huge cap table can be difficult.

How pursued the Reg A+ model so far?

Two of the notable examples in the crypto space are Blockstack and YouNow to verify. Blockstack is essentially a decentralized app and computing platform that lets people build their products on decentralized, distributed technologies that also gives them 100% autonomy over their data and privacy. They’ve raised funds from Foundation Capital, Winklevoss Capital, and Blockchain Capital. The Wall Street Journal reported earlier this month that the SEC has approved a $28 million offering of digital tokens under Tier 2 of Reg A+. Blockstack is offering 62 million units of a token called STX, each of which is priced at $0.30. This is the first SEC-qualified token offering, but it was costly for Blockstack, which reportedly spent $2 million just on getting SEC approval for the sale. YouNow is an online broadcasting service where users can live-broadcast themselves, and share and interact with other live broadcasters. Their infrastructure uses an Ethereum-based token called Props that easily integrates with the application. YouNow developed the Props blockchain and intends to reward content-creators with Props for driving platform engagement. The SEC qualified YouNow’s Regulation A offering to sell 133 million of the Props tokens at a price of $0.1369 per token, with an additional 45 million tokens to be granted to YouNow’s content creators. The company pre-sold $22 million of the tokens, so it looks like the Reg A+ route is off to a good start.

Final resume

Just like the tech sphere, the investment world is rapidly changing. Reg A+ presents a new, highly-customizable way for companies to raise substantial amounts of capital from unaccredited and accredit investors alike; it’s a huge step towards the vision of a decentralized, democratized financial system that enables everyone to participate. Whether Reg A+ is the end-all-be-all of mixed public- and private- mid-stage-offerings is yet to be seen, but it definitely ushers the investing sphere towards a more democratized future and for sure, it costs money for founders.

Sergey Golubev (Сергей Голубев)

EU structural funds, ICO/STO/IEO projects, NGO & investment projects, project management, comprehensive support for business

Join the chat — https://t.me/joinchat/AAAAAE84vCXg5PK-VpHADg