Legal Question in Investment Law in Illinois
Cold-calling, Investors and LLCs
Myself and two associates are a few weeks away from a consultation with an attorney about forming an LLC. It is almost certain that we will form one. The reason we are forming it is because we will be producing an Internet TV show.
I have heard somewhere that cold-calling investors to sell securities in an LLC is against corporate law. Is that true? And, if it is true, are we allowed to cold-call people to get investors interested so that it will no longer be an unsolicited situation by the time we form the LLC? (This is of course assuming we will follow all SEC statutes for cold-calling procedures)
Thank you.
2 Answers from Attorneys
Re: Cold-calling, Investors and LLCs
You may wish to explore a Regulation "A" offering, which would provide you with more freedom vis-a-vi marketing the securities. Feel free to contact me to discuss: [email protected]
Re: Cold-calling, Investors and LLCs
The cold calling is probably not a violation of the Illinois LLC Act, but most likely it is a violation of the state and federal securities laws, with a few minor exceptions.
If you are going to be selling securities, you should do more than have an Operating Agreement for your LLC. You probably should have a private placement memorandum to protect yourself.
If you sell securities in violation of the Illinois Securities Act, your investors could get rescission, i.e., their money back, 10% interest from the time they invest until they get their money back, their attorneys fees and court or expert witness fees.
Please contact me to discuss this in greater detail.
Andrew May - [email protected]
P.S. Information in the footer is no longer accurate.
Related Questions & Answers
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
