Last week, the Securities and Exchange Commission censured Eureeca Capital SPC, an online, securities-based crowdfunding site incorporated in the Cayman Islands, for failing to implement procedures “reasonably designed” to prevent US citizens from accessing and investing in securities through its website. According to the SEC, the website allowed issuers to raise funds in exchange for equity, and hosted securities offerings from non-US companies. Visitors needed to register in order to invest and access certain types of information, but could access the names of offerings, the amount of offerings and informational videos without registering. Although the site had a disclaimer that the services were not being offered to US persons, the SEC found it to be inadequate because visitors who selected “United States” as their country were able to register, access offering materials and deposit funds for purposes of investing. Specifically, the SEC found that Eureeca accepted $20,000 from three US users in 2013 without taking reasonable steps to verify that they were accredited investors. The SEC found that Eureeca violated Sections 5(a) and 5(c) of the Securities Act of 1933 by failing to verify that the US investors were accredited investors, and also violated Section 15(a) of the Exchange Act of 1934 by acting as an unregistered broker-dealer to US users. Without admitting or denying the findings, Eureeca consented to cease and desist from further violations, pay a civil penalty of $25,000, and to a censure.   

In the Matter of Eureeca Capital SPC, File No. 3-16265, before the Securities and Exchange Commission.