orlylicious wrote: ↑Fri Jun 23, 2023 1:51 am
JPC, he says they're offering stock, not going public (?). It's going to be a "Reg CF and a Reg D I think they're called". "It's not a (he says SPEC) SPAC and it's not an IPO. "When we do that, FrankSocial will be part of this."
At the very, very end of the show, he finally used the magic word:
"Crowdfunding". He also said "deflamation" again (we're going to need to add this like T*****'s "Indicated").
But JPC, I take it that you haven't been retained yet.
![Sad :(](./images/smilies/icon_e_sad.gif)
Damn.
I figured he was going to do a Reg CF deal, but didn't want to go into huge detail on my last post. "CF" stands for "Crowdfunding." It lets you raise up to $1.07 million in any rolling 12-month period. You can thus structure the deal as raising $90,000 per month every month
ad nauseum. Most importantly, you can raise cash from non-accredited investors (i.e., not rich capitalists). The rule has a formula saying how much you can put in. It's typically 5% of your income if you make less than $100,000 as most of Lindell's loons probably do.
One nice feature of a Reg CF deal is that you are only subject to federal securities laws and not an endless parade of state securities laws that apply to small deals -- the paperwork for complying with all fifty states' securities rules (though they are mostly harmonized) could eat up a lot of the $1 million you can raise. However, you're still subject to federal fraud statutes and SEC registration requirements. If you're a naughty boy, you will still go to jail.
The problem for Lindell is that $1 million cap. You can't do much in the software/media space with $1 million. IIRC, seeing some financials from some court action, Lindell spent a lot more than that to get his web site up and running at a crappy level of functionality (and security) that impressed nobody. So, this is a marketing gimmick, and not a particularly valuable one at that.
I'm not sure how much self-dealing is prohibited before the fact by Reg CF, but he probably has to disclose any self-dealing, and that may be where he runs into trouble. If he outsources operations to companies that he or friends/family control, but he doesn't disclose that in his filings, that's an easy target for lawyers to exploit.
As far as a Reg D offering (a more normal limited partnership), that's a little more structured, and disclosure requirements are a little deeper. I've reviewed some Reg D deals like the real estate partnerships run by sleazy huckster-bro Grant Cardone, and even a douche nozzle like him discloses the extensive self-dealing he engages in extremely carefully. He's operating on a much larger scale than a delusional fool like Lindell and knows he doesn't want the SEC on his back. But Cardone also knows that the "investor bros" he recruits at his "10x" sales seminars (along the lines of Trump University) won't understand the disclosures before they throw in $20,000.
Lindell's fantasy of a SPAC deal or an IPO are pure fantasy. Over the last few years, there were a ton of cheesy SPAC deals, often sponsored by some sort of celebrity in some sort of direct-to-consumer brand company (the modern-day equivalent of Popeil), crypto something-or-other, or media. So many of those cratered badly that the market for crappy SPAC deals is done. Yes, you can still get quality SPAC deals done, but Lindell is a second or third-rate celebrity SPAC and he'll never get anywhere if Trump's SPAC deal (a first-rate celebrity SPAC deal) can't get done.
Sadly, we were not invited to pitch any of Lindell's business. Reg CF deals are designed to bypass the brokerage industry. Reg D deals are typically done through alternate channels like the myriad of small broker/dealers with a single office and 2-3 principals selling stocks and private partnerships to frat brothers from college or people in their church. There are hundreds, if not thousands, of these firms out there who make a marginal living.
There's no chance that any legit firm out there would touch a Lindell deal. We all focus mostly on institutional investors, since mutual funds and hedge funds own 75% or more of the stocks making up the S&P 500 (i.e., all big companies) on behalf of their clients. There are about 15,000 investment advisory companies total, and only about 500 of those manage over $1 billion. Such a small but wealthy customer base makes it very profitable to focus on institutions, if you're good enough to get into the game. We'd never endanger our credibility with our customers by recommending an obvious loser -- I personally, and probably any of the firms I worked for, would never get another dime from Fidelity or Blackrock if I put a "buy" rating on Frank Social and tried to convince a fund manager to add it to the portfolio.
Of course, I knew you were just poking fun, and took it as such, but wanted to provide some detailed perspective on what he's up to and why it's never going to be more than a low-grade clown show.