"This is a privately held, nonpublicly traded company. This company and the PMB's being offered are not regulated by any governmental entities including the SEC or any other agency or board"
This is not regulated by any government entities or the SEC as per the statement above.
Did lab_Rat get confirmation from the government and SEC about this? Why is it unlikely to happen? What info have we been given about this apart from the above statement?
Zach specifically structured LRM and the number of bonds to be a limited offering of a PRIVATE COMPANY. LRM is not intended to be a publicly traded company. He did this in consultation with a legal advisor and was deliberate in the approach in order to avoid the issues that might arise from regulatory scrutiny.
just because you put it in caps doesn't make it legal... Private companies are regulated by the SEC, too.
http://www.sec.gov/info/smallbus/qasbsec.htm#noregNon-public offering (private placement) exemption
Section 4(a)(2) of the Securities Act exempts from registration "transactions by an issuer not involving any public offering." To qualify for this exemption, which is sometimes referred to as the “private placement” exemption, the purchasers of the securities must:
- either have enough knowledge and experience in finance and business matters to be “sophisticated investors” (able to evaluate the risks and merits of the investment), or be able to bear the investment's economic risk;
- have access to the type of information normally provided in a prospectus for a registered securities offering; and
- agree not to resell or distribute the securities to the public.
In general, public advertising of the offering, and general solicitation of investors, is incompatible with the non-public offering exemption.
The precise limits of the non-public offering exemption are not defined by rule. As the number of purchasers increases and their relationship to the company and its management becomes more remote, it is more difficult to show that the offering qualifies for this exemption. If your company offers securities to even one person who does not meet the necessary conditions, the entire offering may be in violation of the Securities Act.
Rule 506 provides objective standards that your company can rely on to meet the requirements of the Section 4(a)(2) non-public offering exemption. Rule 506 is part of Regulation D, which is described more fully below.
LRM is arguing that having threads on BFL forums and bitcointalk is not public advertising since it is a closed community of sophisticated investors, that they have made the prospectus available for on bitfunder, and that by keeping it on bitfunder it limits shares to a community of bitcoin experts.
there are really in the grey area of all of these (I've sen plenty of people on bitcointalk with limited to no knowledge or experience in finance or business, the prospectus is missing important information such as what fees actually are, and bitfunder allows anyone in the public to sign up with a bitcoin account), but it would be a difficulty case for the SEC to go after for now, and there are much worse companies that they should be looking in to.
LRM's real saving grace may be that they claim to be selling hardware derivatives. Your security is (in the eys of the SEC) worthless; LRM promises you no rights to assets nor facevalue. It will only generate derivative income off of bitcoin mining and is only worth what someone else is willing to pay you for it.
