Selling Stock In Your Unincorporated Porn Site Via Newspaper Ads Isn't What We Call Legal
from the nor-is-it-very-smart dept
Ever since stories of stock option wealth became fairly common, it opened up a tremendous new arena for scammers of all types to convince people they could “get in early” on certain stock deals. In some cases, these were run by out-and-out con men, such as people who pretended to work for VC firms, promising to get investors’ money into hot private startups, or the guy who used “sophisticated Wall Street lingo” to convince people he could sell investors shares in Google stock prior to the company’s IPO. However, at other times, it’s really just naive entrepreneurs who don’t realize you can’t just sell parts of your company without jumping through a few legal hoops. It’s not clear which camp the latest case falls into, but the operators of an adult website based in Colorado clearly were breaking securities law in offering to sell shares in the yet unincorporated company via ads in the local newspaper. Apparently, the ads were convincing enough that at least one person took the company up on its offer.
Comments on “Selling Stock In Your Unincorporated Porn Site Via Newspaper Ads Isn't What We Call Legal”
Yeah, First Post!
Okay, I have heard about stocks on the news and such but can someone please explain to me what stocks are (like how you buy them and what advantages/disadvantages do they give you in terms of monetary gain). From my oh so very limited knowledge of stocks it seems that the porn site should incorporate itself in a componay or overseer before attempting to sell shares. again, this comes from my limited knowledge of stocks and Wall Street stuff. Im 16 for crying out loud! I’m only good at postulating solutions for problems.
Re: Yeah, First Post!
Google is your friend, my dear naive friend.
Basically, when you buy stock in a company you OWN part of said company. Thus if you own 51% or more “shares” (generally) you are the “owner” of that company, or in other words your decision carries the most weight when the board of directors votes on something. As for the monetary gains / losses, it really depends on YOU. Many stocks “mature” and gain value as time goes on, some also lose value, so it all depends on what price you bought shares at and what price you sell at. if you buy 100 shares at 1 cent each ( just random figures here not actual prices) then sell them all when each share is worth 2 cents you made 100% profits right? but then you also could buy 100 shares at 1 cent each, and the company LOSES value and you have to sell each share for .75 cents you just LOST 25%. Stock are somewhat of a gamble, you win some and you lose some, if you do your research you can usually cut down on your losses though. google can tell you much better than i can though, and explain Nasdaq and Dow Jones ( the main markets for U.S. stocks)
Re: Yeah, First Post!
FIRST A COMMENT ON THE ARTICLE: I wouldn’t say you’ve got to jump through a “few” legal hoops. Securities laws are some of the most complex and convoluted laws out there. If you truly want to be able to market your securities to non-accredited investors in a newspaper, I’d suggest it would be a very complex process indeed. (but I’m just being a nitpicking asswipe)
Second to the noob…
Hey, what up newbie?
Yeah… I love investing. I got really interested in it when I was about your age. The dude above is exactly right…
A stock is a piece of ownership in a company. You can buy a little slice of any (or most) major company you’d like. Do you want to own a little McDonald’s? Then buy some. How about Microsoft or maybe you’re a Redhat fan… Amazon, eBay, Playboy? Yep, you can own your own slice of any of those companies, and many, many more.
Companies need money to operate. They need it to pay their employees, buy their inventory, and keep the lights on. But if they do things right, they use money to make more money. Typically, when companies get to a certain size, they want to expand their capabilities. They want to get bigger… do more. They want to obtain more money so they can make EVEN MORE money (greedy fuckers, eh? :). To do this, they issue stock.
A stock is a piece of a company, and by owning it, you own a piece of the money the company makes. In exchange for a piece of the action, you give the company money. And the company takes that money and puts it to work.
Over the course of time, as technology advances, the population gets larger and your business finds more customers, the business makes more money. Because the business makes more money, the price of the stock goes up, and you become wealthier because the value of your holdings goes up. If you consistently invest in stocks over the years and avoid the temptation to buy the useless shit that 99% of the population drools over, you will become rich.
Immediately, your money will begin making money for you WITHOUT YOU DOING ANYTHING. That means you can be on vacation (I’m in Hawaii right now 🙂 and your money can be working for you. In other words, while you’re surfing, your stocks are going up, because the workers in the businesses are making money for you! Sound good? It is!
YOU MUST understand the power of **compound interest** at your age, because it is extremely powerful in the hands of a 16 year old. The compounding of money is when money makes money off of itself. For example, if you were to put $100 a year for 20 years under your mattress you’d have $2,000. But if you put that money into a mutual fund (a mutual fund is a collection of stocks… and this would be smart), at the end of 20 years you’d have around $8,300, by the time you retire at 66 you’d have $335,136.12… all for just ten dollars a month! (I used a 12% return for stocks which is the typically quoted historical average, compounded daily for those that care)
If you’ve made it this far through my rant, you’ll almost certainly be wealthy by the time you retire and should lead a comfortable life. Congrats!
Re: Re: Yeah, First Post!
Wow. My econ teacher couldn’t have said it better.
To anonymous:
Geez, what do they teach you kids in school! lol. Seriously though, I’m 16 also, and they taught us all that last year. Is your school a bit behind or were you just not paying attention? 😉
response to jo mamma
that’s great information about the mutual funds. things like that haven’t been explained well, and i’ve asked. i’m 25 and expecting, so it sounds like something i should look into for my future.
thanks.
[kossori hana.]
um, adult web site stock...yeah
The econ lessons are nice (and might be the only positive outcome of this article) but am I the only one that thinks it odd that an adult web site needs to raise capital by issuing stock??? Growth capital – looking to expand into midget porn??? Perhaps what they really need is a bridge loan for a few new cases of dildos? I’d say it’s safe to assume that the owners don’t realize what they’re giving up when they sell stock…
if there is someone who”s stupid enough to buy it, id be running it too….
Previous comments only pertain to public stocks
When a company incorporates it can choose one of several structures. The two that have stock are S-corp and C-corp. Other structures (SP, LLC, etc. ) do not have stock. All publicly traded stocks are C-corp.
Millions of companies that are not public still have stock. Some are huge.
Whether you are publicly traded or not, the stock represents ownership.
I am sure that this company is not publicly traded. The legal hurdles to go public are huge and no one that is public would make the mistake of trying to sell stock though a newspaper ad.
It is easy for small companies to make this mistake. Lets say Bill and I own an S-corp and we want to bring in Jerry so lets just sell Jerry some of our stock and then Jerry is an owner along with us. This is legal. A small step from here would be to say, let’s run an ad in the paper or the Internet looking for people to invest in our company. Although this sounds reasonable, it is not legal. Your ad is a public offering and the laws governing this are very rigid. This is an example of the government “protecting” us. Whether this makes sense or not I will leave to the reader.
All that compounding interest sounds nice, but the reality is that no mutual fund in the past 20 years has made a 12% annual return every year, much less averaged every day as your daily compounding suggests. The only people that make that rate of return are credit card companies.
The other issue that all these compound interest fables tends to leave out is discounting for inflation. Putting $10 a month into the market in 1940-50 would have been quite a hardship for a 20 something at the time. Think $0.05 for a cup of coffee, and a 3BR1Bath for
Re: Re:
To anon:
That is a hell of a destructive comment and completely ignorant to boot. I’d ask that you mind what you say because it could be your incorrect comments which encourage people to not begin their investing career NOW… which is exactly when everyone should start investing.
Even if you go with more conservative figures (there are always ways to parse statistics) and say stocks average only 10% /year, it is still much better than putting it under your mattress, or worse, spending it on useless shit.
If you’d like proof… spend 30 seconds and look it up!
Also, someone alluded to inflation above, and I completely agree that inflation does pad the real gains by AT LEAST the rate of the CPI (which has averaged about 3% in recent years). This is why merely “saving” money in the bank or in your house is a loser’s bet. You’re getting screwed and not even realizing it until it’s too late.
That’s why you need to educate yourself and do something!
Previous comments only pertain to public stocks
When a company incorporates it can choose one of several structures. The two that have stock are S-corp and C-corp. Other structures (SP, LLC, etc. ) do not have stock. All publicly traded stocks are C-corp.
Millions of companies that are not public still have stock. Some are huge.
Whether you are publicly traded or not, the stock represents ownership.
I am sure that this company is not publicly traded. The legal hurdles to go public are huge and no one that is public would make the mistake of trying to sell stock though a newspaper ad.
It is easy for small companies to make this mistake. Lets say Bill and I own an S-corp and we want to bring in Jerry so lets just sell Jerry some of our stock and then Jerry is an owner along with us. This is legal. A small step from here would be to say, let’s run an ad in the paper or the Internet looking for people to invest in our company. Although this sounds reasonable, it is not legal. Your ad is a public offering and the laws governing this are very rigid. This is an example of the government “protecting” us. Whether this makes sense or not I will leave to the reader.
unincorporated porn company
silly rabbits…. porn is for watching… not for investing
however, with the growth of the industry and were the company legally incorporated and approved to make an IPO, then its an interesting way to get some ASSets