Foreign-based Crownfuding site Eureeca.com censured and fined by SEC

You probably have heard of kickstarter.com or indiegogo.com, but may not be familiar with Eureeca.com.  Although similar, Eureeca provides a global crowdfunding platform for small and medium sized non-U.S. based companies.  However, neither Eureeca nor any of the securities the website offered were registered with the SEC.  Moreover, the website stated that Eureeca’s services were not offered to U.S. persons, but did not prevent U.S. individuals from registering and investing. On November 10, 2014 the SEC entered into an offer of settlement with Eureeca for violations of Section 5(a) and 5(c) of the Securities Act, and Section 15(a) of the Exchange Act.  Eureeca’s violation arose from the website’s lack of restrictions on registration – anyone could register and Eureeca did little to determine the accreditation status of investors.

Fifty U.S. users actually registered with the website.  Out of the fifty, three of those invested nearly $20,000.  The three individuals provided Eureeca with copies of their passports and provided proof of their U.S. address as part of registration.  Eureeca also allowed two of the three to self-certify their accredited investor status through emails.  Eureeca provided no definition of the term and also failed to determine the third individual’s status.

These actions constituted  unlawful sales of unregistered securities in violation of Sections 5(a) and 5(c).  As Eureeca was not registered as a broker-dealer, the sales also violated Section 15(a).  The SEC ordered Eureeca to cease and desist from further violations, censured the company, and imposed a civil fine of $25,000.