USA also has "the crime of illegal fund-raising"? Private funds in American (turn)

In accordance with the law American, similar China illegal fund-raising behavior is usually characterized as illegal public issuance of securities. Judging from the is illegal, must first determine whether the issuance of securities funds. In 1933 the "Securities Law" the second chapter the definition of security section is very extensive, cover and contain everything, also in the investment contract. American related precedents and some fund-raising qualitative for "investment contract", namely the securities, securities without registration issued to the public will be in violation of the securities law.

Private funds in American

Business financing is very difficult, America is no exception: financial institutions, banks, credit unions and savings associations are not easily lending mostly could not withdraw eagle. So at the beginning of the venture, financing can only is held dear by friends. In this way, American similar financial behavior China illegal fund-raising. Even your America President Mr. Clinton, fortune before also involved in illegal fund-raising activities. "White water" scandal was a real estate fund development projects. The Republican special prosecutor to this investigation, subpoena Clinton couple had female partner, want from her mouth out of illegal information about Mrs. Clinton. The female resolute don't spit, judge with contempt of court. She will be put in prison. The female leader is still not open, would rather sit around the wearing, also not to drag Clinton couple.

Financing at the beginning, Whitewater class of the project all fit in easily with, with a company, but in the end is mostly part, because from the time is the huaiguitai, making money, business assistant. Venture financing to make investors money, but investors want to raising people make other people's money. Want to borrow money, finally can not? Once the failure of investment, investors will raise people with hatred. For dimensional stability considerations, the government had to intervene. American to combat illegal fund-raising is hard: a hands, against illegal public offering of securities; two, diddle property can be investigated for criminal responsibility.

　　How to constitute illegal fund-raising behavior

In accordance with the law American, similar China illegal fund-raising behavior is usually characterized as illegal public issuance of securities. Judging from the is illegal, must first determine whether the issuance of securities funds. In 1933 the "Securities Law" the second chapter the definition of security section is very extensive, cover and contain everything, also in the investment contract. American related precedents and some fund-raising qualitative for "investment contract", namely the securities, securities without registration issued to the public will be in violation of the securities law.

The case USA began in 1946, the SEC v. Howe case (SEC v. Howey), by USA Supreme court. The defendants opened a citrus plantation, and this fund-raising.

The judge decided that, as long as it is completely dependent on others to gain profits, funds were characterized as the investment contract. Although America Supreme Court cases, but by the investment contract violations of Securities for public issuance of repeated. Some issuers to make some modifications, in the management to slip by, but the judges usually see very strict, do not let them get away with it. The judge depends on whether investors have time to participate in the management, whether they have the ability to participate in the management of. If there is no such participation, financing will be regarded as investment contract. Some issuers require investors to watering the trees every year, even if they are to participate in the management. The judge shall not be accepted.

So far in 1946, 60 years have passed, but American supreme court still occasionally investment contract decision. The SEC v. Edwards (SEC v. Edwards, 2004) is an example.

The case involved a payphone Fanzu, investors enjoy a fixed return. The Supreme Court found that the USA, such Fanzu belonging to the investment contract, belongs to securities, contract the fixed return does not change the nature. For investment contract, the justices attitude seems to be rather recognize it, not that it does not. The judge said, "investment contract this definition is the embodiment of the flexible principle and not immutable and frozen, static, can adjust to the myriads of changes, the Bureau, as long as the construction bureau is to borrow to profit, try to use other people's money."

American court funds are investment contract, depending on different factors in different areas, real estate is regarded as the investment contract, depends on the following factors: property management is fully managed to others, rental housing is only handled by the custodian / third party, whether the emphasis on operating return; retirement arrangements or employee welfare arrangements are considered as the investment contract, depending on the employee turnover, resignation or retirement, whether to sell stock; authorized account authorized by customer, the broker can generation of investors to buy or sell a security or commodity. Authorized accounts are usually are not regarded as securities, unless many accounts are also being together. The franchise is regarded as the investment contract, depends on whether the risk investment; member capital are regarded as the investment contract, depending on the membership is transferable; business cooperatives are regarded as the investment contract, depending on the potential return on investment and equity transfer degree; animal insemination project is regarded as the investment contract, depending on the insemination or not depends on the professional knowledge.

The case USA a little in common: did not investigate the criminal responsibility of the accused. Even the judge mentioned act of the defendant is MLM suspicion, no criminal responsibility shall be investigated for the defendant. As long as there is a project financing, the SEC is usually regarded as illegal public issuance of securities. But the case, the defendant is the absorption of funds for industrial and commercial, not to put money into the capital market.

　　Diddle property fund

According to the Chinese Supreme Court promulgated "on the trial of criminal cases of illegal fund-raising the concrete application of law interpretation of several issues", if it is for the purpose of illegal possession, "the crime of illegal absorbing public deposits" into "the crime of fraud". American illegal public offering of securities can also be converted to securities fraud. Madoff Ponzi scheme is a typical example.

America stock exchange rules for the implementation of 10-B is American "Securities Exchange Act of 1934" Tenth second, suitable for America securities market various types of fraud, called universal weapon. According to the 10-B shall be investigated for criminal responsibility of securities fraud defendants. But American securities fraud is fraud, no special forms of financial fraud. According to the USA law, whether the behavior constitutes fraud provisions of 10-B, the key is to see whether he has the "cheat" (similar to "explain" in the "illegal possession") the behavior of investors.

American is legal developed countries, securities fraud in America occur from time to time, not because of the statute of frauds have disappeared. But securities fraud also has a positive effect, can help people to recognize bubbles.

"In short" a book author Michel Lewis has many theories, one of the view that, "the specific features of bubble is completely recognizable. One of the crazy sign fraud frequency speed, complexity......". The Federal Bureau of investigation report shows that, since 2000, with the housing mortgage related fraud has increased five times.

Specific to the legal or illegal fund-raising, fund-raising, in the United States is similar, that is, the big banks are to blame. In many USA, small banks, and many more similar or suspected bank financial institutions, and legal environment for the private funds of the relatively loose. But USA big banks still upset America economy, have a good state to wail like ghosts and howl like wolves, precarious. Chinese for private funds when defending, but a disease in our very vitals or big banks.

These need government funding assistance large bank listed before, after appearing on the market still need government capital injection or disguised capital assistance. From the United States, the law and the legal practice, the civil financing problem is imminent trouble, big banks is a disease in our very vitals.

Authors: Zhu Weiyi source "Fangyuan")