Love and Money: An Affinity-Based Model for the Regulation of Capital Formation
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.
Theresa A. Gabaldon, Love and Money: An Affinity-Based Model for the Regulation of Capital Formation, 2 J. Small & Emerging Bus. L. 259 (1998).