6 ms·

The SEC should have said "Very clever, kids, but, ah, no. Knock it off." A fine here is ridiculous -- the participation was capped at $250, this clearly wasn'

The SEC should have said "Very clever, kids, but, ah, no. Knock it off." A fine here is ridiculous -- the participation was capped at $250, this clearly wasn't intended to take in serious amounts of money. The SEC can't let something like this go on, but it can be less hamfisted in its handling. Really the right thing here would have been a visit by SEC staff, asking a lot of questions and pointing out some security law violations, at which point the operators go "umm, didn't think about that, we'll be good". But that approach doesn't let the bureaucrats justify 100 hours of browsing on their time sheets, does it? The injunction to obey security laws going forward does make sense, it gives the SEC leverage if these same people actually do pop up later as scammers. Some journalism on what they were doing: http://www.bloombergview.com/articles/2015-03-11/how-should-a-bank-be- http://www.bloombergview.com/articles/2015-03-11/how-should-... http://ftalphaville.ft.com/2015/03/10/2121090/sand-hill-is-the-new-wall-street/ http://ftalphaville.ft.com/2015/03/10/2121090/sand-hill-is-t...

deleted 11y ago
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rhino369 11y ago
20k fine is nothing. They were let off with a slap on the wrist, probably because they were willing to cooperate.
- elaineo 11y ago
  We understand that we did some unacceptable things. We get it. As individuals, we don't have $20k. The fine is not just a slap on the wrist, it's financially ruinous.
  - anigbrowl 11y ago
    No it isn't, people leave college with many times that amount of debt. Split it up between you, ask to get into a payment that's capped at a % of your income, work it off over a year or two. Make copies of your bank statements and your tax returns to confirm that you are in fact poor. You could probably make the money back in speaking fees or writing an e-book about your experience and what you learned (rather than how pissed off you are). Yeah, it's a lot of cash, but I've been billed more than that for a night in the ER when I didn't have insurance. And seriously, it was up to you to think about the fact that this was bound to attract regulators' attention and that the time they spent on you is currently being picked up by taxpayers. I know you want to compare yourselves with bucket Shops, which you think played an important role in democratizing/disrupting finance a century ago, but this whole idea of 'a chance for regular folk to get in on the action!' is unfortunately the same sort of psychology that con artists use to qualify their marks. Honestly, if one of you had done an ask HN about whether this was a viable thing people here would have told you why not and what you needed to do to be legit. Edit: come to think of it, I'm surprised your mentors int he Accelerator didn't point out this very obvious pitfall to you.
    - chernevik 11y ago
      > it was up to you to think about the fact that this was bound to attract regulators' attention Oh please, these people are what, 22? 25? They are supposed to know the basics of security law off the tops of their heads? They got an idea and spun it up in a weekend. Yes, on reflection, allowing this sort of thing opens all sorts of loopholes for bad actors. And it had to be shut down. But it isn't as if this was done by a bunch of associates at Sullivan & Cromwell, or the interns at Goldman Sachs. They did something fun, it got afoul of the securities laws, whatever. Explain the legal breech and practical problem and tell them to pack it up, boom, we're done. But bureaucrats are basically sycophants and / or bullies. They aren't in the job to protect the public. They're in the job to make money by connections, and to push around people without the knowledge or stones to tell them to fuck off.
      - tzs 11y ago
        > Oh please, these people are what, 22? 25? They are supposed to know the basics of security law off the tops of their heads? No, but they should have known that it might be relevant and done some research online and/or talked to a lawyer. Later, when Matt Levine, who is a columnist from Bloomberg and a lawyer, wrote about them in his column and said that he could not see how it is legal, specifically mentioning SEC and CFTC regulations as problem areas, that should have been a giant freaking clue that they should investigate these things. Instead, they tweeted "Cool! NYC banker hipster @matt_levine is hating on us. We must be getting too mainstream :)".
        chernevik 11y ago
        Because we should all talk to lawyers before we do anything.
        tzs 11y ago
        I said do research online and/or talk to a lawyer. And we are not talking about doing just "anything". We are talking about a very specific thing: starting a company that is going to take real money from people, and help them do risky things with it--a company that depending on how you look at it is a securities company or a gambling company or a prediction market. According to their FAQ, they planned to have no limits on how much money someone could put into this, and they were aiming for very high volume, so if it had worked out they would be dealing with vast amounts of money. All of those are highly regulated areas, and it is hard to believe that anyone who had even glanced in the general direction of doing a company in any of those areas would not be aware of that. So are you seriously suggesting that it is reasonable to start a company that is going to handle, you hope, vast quantities of money for a vast number of people in a highly regulated industry, and NOT do any online research or seek legal advice to make sure that you are legal? And do you seriously think that when a prominent writer who covers your field and is a lawyer tells you he can't see how your business is legal, it's reasonable to mockingly dismiss that?
  - deleted 11y ago
    [deleted]
  - chernevik 11y ago
    "Ruinous" is a strong word. It seems like a lot of money, plus the legal bills, right? But you'll be ok. I definitely agree that it's unfair. But life goes like that. Don't focus on the assholes. Pay your bills and move. Ten years from now, this just a really good story. You'll be fine.
    - elaineo 11y ago
      Thanks, you're right -- "ruinous" is an exaggeration. It seemed like a lot of money to us, especially since we had made $0, but in the grand scheme of things it won't kill us.
  - davidgerard 11y ago
    You're on developer salaries in SV. I really doubt that.
deleted 11y ago
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ikeboy 11y ago
Second is not readable without account.
davidgerard 11y ago
Unfortunately, the "not as bad as" argument is also used by every scammer out there trying to stay just under the radar. (Particularly when Bitcoins are involved.) $20,000 was a cheap lesson.
recampbell 11y ago
This may be an unpopular view, but I can understand why they did this. Without a fine, we wouldn't be talking about this, and they'd have to spend time and money trying to find and stop this kind of thing in the future.
- chernevik 11y ago
  They didn't have to spend a lot of time and money to stop _this_. Visit the site, send someone to ask some questions, operators get the message, done. When two dozen of these start popping up, ok, now it's time for a message. Until then? Just get the thing on side and call it a day.
akg_67 11y ago
It is just a simple case of bullying the little guys while SEC plays "you scratch my back and I scratch yours" with big guys.

deleted 11y ago

[deleted]

rhino369 11y ago

20k fine is nothing. They were let off with a slap on the wrist, probably because they were willing to cooperate.

elaineo 11y ago
We understand that we did some unacceptable things. We get it. As individuals, we don't have $20k. The fine is not just a slap on the wrist, it's financially ruinous.
- anigbrowl 11y ago
  No it isn't, people leave college with many times that amount of debt. Split it up between you, ask to get into a payment that's capped at a % of your income, work it off over a year or two. Make copies of your bank statements and your tax returns to confirm that you are in fact poor. You could probably make the money back in speaking fees or writing an e-book about your experience and what you learned (rather than how pissed off you are). Yeah, it's a lot of cash, but I've been billed more than that for a night in the ER when I didn't have insurance. And seriously, it was up to you to think about the fact that this was bound to attract regulators' attention and that the time they spent on you is currently being picked up by taxpayers. I know you want to compare yourselves with bucket Shops, which you think played an important role in democratizing/disrupting finance a century ago, but this whole idea of 'a chance for regular folk to get in on the action!' is unfortunately the same sort of psychology that con artists use to qualify their marks. Honestly, if one of you had done an ask HN about whether this was a viable thing people here would have told you why not and what you needed to do to be legit. Edit: come to think of it, I'm surprised your mentors int he Accelerator didn't point out this very obvious pitfall to you.
  - chernevik 11y ago
    > it was up to you to think about the fact that this was bound to attract regulators' attention Oh please, these people are what, 22? 25? They are supposed to know the basics of security law off the tops of their heads? They got an idea and spun it up in a weekend. Yes, on reflection, allowing this sort of thing opens all sorts of loopholes for bad actors. And it had to be shut down. But it isn't as if this was done by a bunch of associates at Sullivan & Cromwell, or the interns at Goldman Sachs. They did something fun, it got afoul of the securities laws, whatever. Explain the legal breech and practical problem and tell them to pack it up, boom, we're done. But bureaucrats are basically sycophants and / or bullies. They aren't in the job to protect the public. They're in the job to make money by connections, and to push around people without the knowledge or stones to tell them to fuck off.
    - tzs 11y ago
      > Oh please, these people are what, 22? 25? They are supposed to know the basics of security law off the tops of their heads? No, but they should have known that it might be relevant and done some research online and/or talked to a lawyer. Later, when Matt Levine, who is a columnist from Bloomberg and a lawyer, wrote about them in his column and said that he could not see how it is legal, specifically mentioning SEC and CFTC regulations as problem areas, that should have been a giant freaking clue that they should investigate these things. Instead, they tweeted "Cool! NYC banker hipster @matt_levine is hating on us. We must be getting too mainstream :)".
      - chernevik 11y ago
        Because we should all talk to lawyers before we do anything.
        tzs 11y ago
        I said do research online and/or talk to a lawyer. And we are not talking about doing just "anything". We are talking about a very specific thing: starting a company that is going to take real money from people, and help them do risky things with it--a company that depending on how you look at it is a securities company or a gambling company or a prediction market. According to their FAQ, they planned to have no limits on how much money someone could put into this, and they were aiming for very high volume, so if it had worked out they would be dealing with vast amounts of money. All of those are highly regulated areas, and it is hard to believe that anyone who had even glanced in the general direction of doing a company in any of those areas would not be aware of that. So are you seriously suggesting that it is reasonable to start a company that is going to handle, you hope, vast quantities of money for a vast number of people in a highly regulated industry, and NOT do any online research or seek legal advice to make sure that you are legal? And do you seriously think that when a prominent writer who covers your field and is a lawyer tells you he can't see how your business is legal, it's reasonable to mockingly dismiss that?
- deleted 11y ago
  [deleted]
- chernevik 11y ago
  "Ruinous" is a strong word. It seems like a lot of money, plus the legal bills, right? But you'll be ok. I definitely agree that it's unfair. But life goes like that. Don't focus on the assholes. Pay your bills and move. Ten years from now, this just a really good story. You'll be fine.
  - elaineo 11y ago
    Thanks, you're right -- "ruinous" is an exaggeration. It seemed like a lot of money to us, especially since we had made $0, but in the grand scheme of things it won't kill us.
- davidgerard 11y ago
  You're on developer salaries in SV. I really doubt that.

deleted 11y ago

[deleted]

ikeboy 11y ago

Second is not readable without account.

davidgerard 11y ago

Unfortunately, the "not as bad as" argument is also used by every scammer out there trying to stay just under the radar. (Particularly when Bitcoins are involved.) $20,000 was a cheap lesson.

recampbell 11y ago

This may be an unpopular view, but I can understand why they did this. Without a fine, we wouldn't be talking about this, and they'd have to spend time and money trying to find and stop this kind of thing in the future.

chernevik 11y ago
They didn't have to spend a lot of time and money to stop _this_. Visit the site, send someone to ask some questions, operators get the message, done. When two dozen of these start popping up, ok, now it's time for a message. Until then? Just get the thing on side and call it a day.

akg_67 11y ago

It is just a simple case of bullying the little guys while SEC plays "you scratch my back and I scratch yours" with big guys.