Misuse of the JOBS Act

Misuse of the JOBS Act

Misuse of the JOBS Act – SEC files suit against man accused of misleading investors by claiming JOBS Act would allow him to raise billions; case reminds investors to be cautious, even as the Act loosens restrictions on raising money for small business.

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April 25, 2013
Washington, DC

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The Securities and Exchange Commission (SEC) has filed charges against Daniel Peterson and his company USA Real Estate Fund 1 for misleading investors under the Jumpstart Our Business Startups (JOBS) Act.

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Peterson raised about $400,000 from more than 20 investors, some of which he spent on personal expenses. Peterson repeatedly stated to the investors that the 2012 JOBS Act would enable him to raise billions of dollars by advertising the offering to the general public.
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The SEC has not adopted the proposed rules to the JOBS Act, which means the securities issuers cannot yet solicit investment from the general public. An interesting fact is despite the fact that the capital raised from the defrauding scheme based on the JOBS Act is relatively insignificant, the SEC charged Peterson and his company for antifraud provision violation.
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The SEC announcement and complaints can be found here.