Marketplace Lending and Crowdfunding: What to Watch For in 2017
Marketplace lending and crowdfunding are methods of raising capital on the internet by using technology to match borrowers and investors on everything from microcredit personal loans to million-dollar business-financing arrangements. These peer-to-peer arrangements also allow investors to pool their risk by distributing their loans in small amounts to a multitude of borrowers. While usually done on user-friendly platforms or through social networking, these forms of lending carry their own special risks, and deciding which loans are safe and likely to produce good returns takes savvy and a set of analytical tools. Further, as these methods become more and more prevalent (and begin to draw more interest from traditional lenders and institutional investors), regulatory agencies may soon act to impose new rules or enforce existing rules designed for traditional lenders, consumer protection, or crime prevention.
This two-hour course will give individual and institutional investors an overview of peer-to-peer lending and the legal issues surrounding it. A panel of key thought leaders and professionals will walk through the various processes, identifying potential hazards along the way. Also to be covered is compliance with requirements of the Bank Secrecy Act, USA PATRIOT Act, the Financial Crimes Enforcement Network (“FinCEN”), anti-money-laundering (“AML”) laws, anti-discrimination laws, consumer-protection laws, the JOBS Act, and Securities and the Exchange Commission (SEC), as well as management of associated costs.
- Marketplace Lending and Crowdfunding Distinguished
- Advantages and Risks
- Due Diligence and Compliance
- Anti-Money-Laundering Laws and Best Practices
- Consumer Protection Laws and Best Practices
- Considerations when Partnering with Banks
- Donation-Based Funding
- Rewards-Based Funding
- Equity-Based Funding
- Accredited and Non-accredited Investors
- Solicitations of Interest
- Jumpstart Our Business Startups (JOBS) Act
- SEC Regulation A+
Darryl Steinhause, Partner
Joseph A. Valenti, Attorney
- Federal regulators are targeting anti-money-laundering (“AML”) and cybersecurity compliance programs for enforcement, especially in the FinTech industry.
- Appropriate due diligence (on borrowers, investors, and vendors that service loans, provide credit assessments, or collect debts) mitigates legal and business risks.
- As marketplace lenders partner with banks, they begin to subject themselves to additional regulations and compliance expectations while also gaining access to valuable capital sources.
- Anti-discrimination and consumer-protection laws contain potential pitfalls for marketplace lenders using either advanced analytics or overly simplified lending contracts.
- Some of the quick-win solutions and safe harbors available to traditional banks can be carried over to marketplace lenders with relative ease without a corresponding increase in overhead costs.
Reid Feldman, Partner
Kramer Levin Naftalis & Frankel LLP
Who Should Attend:
- Fund Managers
- In-house Counsel
- Finance Executives
- Finance Lawyers
- Securities Lawyers
Darryl Steinhause has more than 30 years of experience in complex securities and tax transactions, representing both sponsors and investors in a range of deal structures. The Daily Journal selected Steinhause as one of the Top 100 Lawyers in California in 2014 for his work with clients looking to invest in new online real estate platforms. Steinhause was one of the first in his field to recognize the implications of the 2012 JOBS Act which amended Rule 506 of Regulation D of the Securities Act of 1933, and has been advising clients on both the potential and the complications of such platforms. Steinhause has been recognized as an industry expert at the forefront of this exciting new area of opportunity, and has spoken on the subject of crowdfunding at numerous conferences since the Rule changed in 2012.
Darryl Steinhause has more than 30 years of experience in complex securities and tax transactions, representing both sponsors and investors …
Joe Valenti is a lawyer in the Pittsburgh office of K&L Gates, a Global 20 law firm. He was a counterterrorism analyst under the Bush Administration after 9/11 and is a Certified Anti-Money-Laundering Specialist. Now routinely representing Fortune 500 companies and other entities, Mr. Valenti focuses his law practice on regulatory compliance, internal investigations, and litigation defense in the financial-services and information-technology industries. He has advised on legal issues related to terrorist financing, money laundering, cybercrime, fraud, unfair/deceptive business practices, and intellectual property. He has investigated or litigated cases involving the FBI, SEC, IRS, FRB, FinCEN, USPIS, DHS, FTC, corresponding foreign and state agencies, and internal whistleblowers. Before his career in government service and law, Mr. Valenti spent over seven years working as a computer technician and programmer with various private employers. Drawing from this prior experience, he has written extensively on the evolving regulations and compliance standards governing marketplace lending.
Joe Valenti is a lawyer in the Pittsburgh office of K&L Gates, a Global 20 law firm. He was a …
Reid Feldman’s principal areas of practice include: corporate transactions, including mergers and acquisitions; financial and banking matters, including alternative finance (including fintech and crowdfunding); corporate finance and structured finance; insurance and reinsurance matters; advice to fiduciaries, trust structures, individual clients and family offices; and litigation and arbitration, including litigation on financial matters, commercial disputes, insolvencies and insurance/reinsurance claims and arbitrations.
Mr. Feldman received his education at Columbia University (B.A.), Yale Law School (J.D.; member, Yale Law Journal) and Oxford University (M. Litt.).
His recent presentations and publications include: « Les bons de caisse adaptés au financement participatif », Option Finance (2016); “Renewable Energy Crowdfunding Conference, French Chapter” (2015); “New requirements for reports on trusts with connections to France, Client Alert” (2015); The Global Directors and Officers Deskbook, French Chapter, ABA Publishing (2014); “Crowdfunding via securities abroad”, Rapport Moral sur l'Argent dans le Monde - Regulation, Governance, Complexity in globalized finance (2014); “Recouvrements par les victimes de la fraude Madoff”, L'Agefi” (2014); “European Private Target Mergers & Acquisitions Deal Points Study”, ABA Business Law Section, M&A Committee (2016)); “Euro-crisis update - focus on non-sovereign investments” (2013); « Run-Off en France : les relations juridiques et la gestion des contentieux », EFE (2009).
Mr. Feldman serves on the Board of Advisors of the Yale Law School Center for the Study of Corporate Law and is a member of the European Corporate Governance Institute (ECGI), the ABA TIPS International Committee (Vice-Chair); the European Crowdfunding Network; and the ABA Business Law Section M&A Committee (Chair, European Deal Points Study).
Reid was described by IFLR 1000 2017 in Banking as “very easy to work with, knowledgeable and proactive” and in Legal 500 Paris 2013 as a “high-caliber” lawyer. He is ranked with as well known (forte notoriété) in Acquisition Finance; with a highly regarded practice (pratique réputée) in M&A, Insurance/Reinsurance litigation as well as in Insurance/Reinsurance Regulatory, Securitization and Structured Finance and Arbitration (Décideurs Stratégie Finance Droit 2015-2016).
Reid Feldman’s principal areas of practice include: corporate transactions, including mergers and acquisitions; financial and banking matters, including alternative finance …
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Method of Presentation:
Experience in finance or real estate
NASBA Field of Study:
Finance - Technical
NY Category of CLE Credit:
Areas of Professional Practice
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