Love and Money: An Affinity-Based Model for the Regulation of Capital Formation

Document Type

Article

Publication Date

1998

Status

Accepted

Abstract

The article proposes that the price of exemption under the Securities Act of 1933 Rules 504 and 505 be made a legally enforceable stipulation that the promoters are assuming the strictest of fiduciary duties in relation to the formation, conduct, and dissolution of a business. These duties, which would be owed directly to each investor, would, among other things, provide important protections for those least likely to be alert to their own self-interest -- family and friends contemplating investment in small businesses.

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