CEO and Co-Founder
CEO and Co-Founder
Oscar is currently one of the Top 10 Global Thought Leaders in Equity Crowdfunding, a Top 5 Fintech Influencer, Top 10 Blockchain and a Top 50 InsureTech. He has published an eBook that has been downloaded in over 20 countries, and been distributed by partners worldwide. Oscar is a featured speaker on Fintech, regulated, equity crowdfunding, compliance, shareholder management, investor relations, and transparency in the USA, Australia, UK, Germany, France, Netherlands, Canada, Singapore, Indonesia and China. He speaks to audiences covering alternative finance, RegTech, insurance, banking, legal, and crowdfunding. Oscar also advises the world’s leading research, accounting, law firms and insurance companies on the impact Fintech, RegTech, LegalTech, InsurTech and OrgTech is having in their business.
Chief Compliance Officer
Chief Compliance Officer
Chief Revenue Officer with over 20 years of SMB, Enterprise Sales and Management experience in the US, Canada, UK and Ireland in technology (SaaS) and Financial Industries. From start up, to Fortune 500 and hyper-growth enterprise companies, I create, cultivate successful company cultures and lead teams that contribute to desired revenue growth. I'm responsible for all revenue-related strategies globally. I lead Business Development, Sales, Account Management, Sales Operations, Strategic Partnerships and Marketing activities. I believe in giving back and through philanthropic endeavours throughout my career, I've given my time and expertise to grow the operations of The Canada One Foundation and KitsFest. As a senior advisor to the board, our foundation has had a positive impact on our local community. Over $1.2M in post-secondary grants and nearly $800K in social legacy projects that continue to benefit our young leaders and our communities.
Jason Futko is co-founder and chief financial officer for KoreConX. Prior to KoreConX, Futko co-founded Crowdfunding Alliance of Canada. In addition he was managing director of an Exempt Market Dealer and Chairman of a public investment vehicle in the United Kingdom. Jason has vast experience in financing businesses globally. He has extensive knowledge of international know your client (KYC) and anti-money laundering (AML) regulations.
Oscar Jofre 00:00
All right. So you know, today, you got a glimpse from listening to people about what it takes to put everything together. From from the lawyers, you heard the preparation stage, we talked about all the different things you need to get together, we kind of give you a sneak peek into the IRA world. What is that going to look like? Whoa, look at this handsome fellow. Love the bow tie. That was a nice bow tie there. I’m sorry. Just it came at me. So in and then listening to the investor acquisition, you put all that together. We’ve added this new part of our KoreSummits to kind of give people kind of an overview what we’re live now. Now you put all that together, what happens now, people often think that all the preparation is all the stuff you got to do. It’s not. And we have brought a group together here. So these are the participants that are working alongside the investor acquisition, they’re bringing all that traffic flow, right? Well, someone’s got to direct the traffic, that traffic, it’s got to flow somewhere, that traffic does need to be viewed by someone approved. So eventually, the capital can end up in your, your company’s bank account, so you can start utilizing it to grow your business. So this part of the KoreSummit is to discuss your life. And we are brought in three different perspectives for you to to review today from the broker dealer, which is what is compliance doing from the transfer agent, what all transfer agents are doing, of course, and compliance officers. And that’s going to be led off today by Julien. So Julien, the floor is yours. And you should see his bow tie. It was a big one.
Julien Phipps 04:29
Awesome. The Bow ties are optional. Thank goodness, right. Yeah, so Jim, I mean, I was thinking, you know, about, you know, what this this session was all about today, and really just kind of having this dialogue and being able to discuss all about this. I mean, from your perspective, what what are some of the things that you find are key to getting started with this?
Jim Caboy 04:55
Sure. First, I’ll get started since I got a bit of an ego here. I did tie that bow tie myself. Thank you, Jim Caboy compliance at Rialto markets. What was your question? What are some of the things to get started. So one of the first things we do is is is AML. And identity, we want to know who they are, and everything’s happening over the internet. This isn’t the typical brokerage, or traditional transaction where you’re walking into a brokerage, providing your license, shaking a hand, and we get to know who we are. So we need to take a few extra steps. And we use the vendors and the technology so that we can do this. And in doing that, we also speed this up greatly. While we there are some pitfalls and things take time dealing with retail and the information we get. And we need to work to fix it, which is things that we step in and help with, we start off right off the bat with you know, let’s find out who you are, make sure you’re suitable, and to appease the regulators and do the right thing, that you’re not a terrorist and, you know, providing money that we don’t want and intertwined in our accounts or investments. One thing I do like about the way we work with KCX, and the technology that we use is, we do this review first, before we take anyone’s money. It’s just as a wet blanket compliance guy who also deals with operations. If something goes wrong, I don’t want to have to give your money back or go through the refund process and delay someone more. So you know, there’s a little thing and a highlight that I like to bring up, it’s that we make sure you pass who you are all the reviews. And once we know who you are, and things are in order, then we’ll go and take the funds. And at times investors they are they’re quite confused about this, they you know, when they hit an investment button, sometimes, no matter what email or information they do get people or people, you know, I admit I don’t read everything I should, every time most times that Apple update agreement comes, I click on that right away. So details get missed. And this is new for a lot of folks, not just the this ecosystem and people that are here on this call and conference. But for these investors, you know, some, some are on Reddit and read about all these things and figure them out. And you know, we get calls and speak to those guys to and they’re great questions, but some, some just don’t understand. So they assume the minute they hit that button that I now own shares, because I was able to, you know, transfer some money through PayPal to my buddy for, you know, the Thursday night football pool that fast. And they fact, you know, they use credit cards, or they’re using ACH. So they just the money’s gone, it must work. So, you know, once I think I’m going way down the process here,
Julien Phipps 07:52
This is great. Yeah, I
Jim Caboy 07:54
Keep going. Right?
Julien Phipps 07:55
I was gonna say, Jim, yeah, you brought up a great point about the fact that that process is the way it is, because it actually can end up saving time later from having to refund and, you know, send the money back, as you mentioned, you’re doing the compliance up front, which is also the work that the broker dealer is being paid to do. Right. So that’s an important role, alleviating a lot of the stress and pressures from the issuer themselves. And that’s a key, you know, point because not all, I guess, broker dealers, and perhaps not all, you know, folks in the industry are doing it in that sequence, we’ve an integrated process with, you know, Rialto as well, that really facilitates that. And I would say that, you know, this goes back to, you know, the past, you know, payment rail providers that, you know, you look at the credit card industry, where they actually, you know, had pump the brakes, for lack of better terms on certain approvals in this in this space, because of the fact that these compliance measures weren’t being met early on and you know, imagine refunding 1000 investors 10,000 investors, we don’t want that and we’re moving the industry forward in such a way where compliance is driven with the utmost you know, integrity and respect to that those those regulations. So, yeah, Jason, what do you think about you know, some of the key issues on the transfer agent side as it relates to compliance,
Jim Caboy 09:22
Let me just bully in Jason one quick, got a bigger beard than me I’m gonna just real quick because I want to jump on it. Not only is it just a pain in that pain to refund all those monies, but what if one of those investors happened to be a terrorist? Yeah, what if he was on the list and we couldn’t clear him and he was for 25,000 If he was for $200. We’re now filling out SARS reports. And we are now opening things up and peeling back layers of onion it’s in good it’s great that we would be able to catch somebody or at least fill out the report but I’m here to help the issuer raise money keep Right, of course, my job is to seek out or you know, sniff out terrorists and bad guys. But if we can avoid all that, and not touch their money, and know that up front, we can get back to doing what we need to do, closing the applications and things that are coming in. Sorry, Jason.
Jason Futko 10:16
Yeah, no problem, James. And just so everybody knows, I’m Jason Futko Co Founder of KoreConX, I’m here to give you some perspective on the transfer side, I will start by agreeing with everything Jim just said, and, you know, it’s, it’s key for the process that we do it properly, we do it correctly. And everybody, you know, from a compliance perspective does their share and James from Rialto, you know, they take on a lion’s share of that, as the broker dealer or any broker dealer in this situation, they have to do all of that AML, all that KYC, they have to validate those investors. And of course, there’s many ways of doing that with, you know, the modern technology that we have. And it’s great that they can do it and get that down to the process. From a transfer perspective. You know, there’s there’s several key things you’re going to want to consider. First, is when you’re when you’re reaching out to do your RegA, and prepping and getting ready to do that, it’s best to hire your transfer agent, get them engaged, find out what services they offer, make sure that you know, you’re going to get everything you need. From there, make sure you give them your historical cap table, get all of that information loaded into the system. Nothing worse. And I’m sure James will echo this too, when somebody makes an investment in their reggae. And they’ve already invested in the company previously, and they’re wondering where their previous investments have been. So it’s, it’s it’s key to get that information up into the system. So that as I said, as the reggae starts happening, and those investors come back for their second investment round, they can look and see both of their investments in the same place, as opposed to wondering what happened to their first investment and thinking there’s an issue and, you know, running that up the ladder. So, you know, getting that updated is first, of course, you know, getting all the documentation onboarding that was saying you’re going to need to go through that process with the TA that you’re using, they’ll have a list of documents they require. And they’ll have, you know, the forms that they need to get through. And of course, once they’re done all of that, if you’re doing a live offering on on a technology technology platform, such as Rialto, you’re going to need to have your current offering outline to the transfer agent as well and to the technology provider and to the broker dealer. So everybody knows what the offering is all of the details is that a preferred shares a common shares a promissory note, whatever the offering is, it’s important to get that information across so that everybody’s on the same page, and to make sure that the technology is actually pushing the right investment through the platform. If you you know, if you did a common share on your historical cap table, but you failed to tell anybody in the in the room here or your team, that you’re doing a preferred share offering, they may just start taking along and doing common share offering, obviously, they’re not going to because they’re going to do due diligence. But if it were to slip there, they could just load up some more common chair. So it’s important to get that information, make sure you got the pricing make sure everybody’s on the same page when it comes to the existing offer. Absolutely.
Jim Caboy 13:26
And of course big mouth has something to add to that and jump on because Jason I think not that you missed it but communication to your previous shareholders. The fact that the transfer agent has this ability, you know, some of these times these other these issuers, they did previous offerings, they weren’t happy with the other ones they don’t want to go back let’s give Rialto a shot we get in there and you know, we’re we’re handling this current offering but we have zero insight to anything that went on before and you know, those guys might get a marketing email and wake up and realize I did spend five grand a couple months or a year ago I don’t even remember what happened and they’re gonna come to me right away and unfortunately, I can’t, I can’t help them. So if you get your records in the issuers get records to the transformation ahead. All this can be thought out and an email this such that Hi, all of your shares will soon be available. We’re working on it and be specific. We expect it to be in three days, it could take five if there’s a hiccup, you know, settings like that the communication to those shareholders is so great. I’ve learned from these last few where this scenario has happened because those older older shareholders are now awoke and if they see something different, like a new price that went up, whatever maybe the interest is still there and of course you’re retargeting the investors you have so keep them happy. Have them understand the process from the last one, maybe even outline that and by giving that information to the tranfer agent, they have all the emails, they have that information. And of course, the message should come from, you know, the issuer, but the point is the transfer agent and say yes, piggyback on that, here’s how you log in, and you know how you see these shares. And this would with this, this really, this looks good. This shows that you’re professional, this shows that you’re involved that you’re some of the questions we get sometimes are, you know, is this company good, because I don’t know who they chose to brokers ago, and, and you have to calm them all down and explain, everything’s gonna be alright. And the company is making the action, they’re working with the transfer agent, things are in the right motion. And you will get there. It’s just as technologically sound as things are these days, some things still take days and weeks. And when you’re talking about tons of data, you want to do it right, especially when they’re shareholder records. So I think, I think the ability to just to piggyback to get, I mean, the transfer agent and the broker dealer, we may not be the first ones that you’re thinking of, when you start a reggae, you should start with your lawyers and even marketing and think about things. And we’re later on to be brought into the process. But you know, the TA with that communication ability, to me is, is something that’s big, because I can only communicate to who came to me and what I know about and I don’t want to leave an issuer in the lurch when some of these issues, investors are previous investors, and I’m talking to them, because they’re their current, some just woke up. And you know, now I don’t want to buy it at this price, because I got it at that price. You know, okay, let me but you want to help them and get them through anyway, because you know, everything begets more. So
Jason Futko 16:39
We’ve got that time to do that. I mean, when you when you, when you’re doing your filing with the SEC, you have to select a transfer agent at that point anyways. So it’s a good idea to get your transfer agent engaged, start your communication, because as you said, communication is key. Let your existing holders know a that you’re going to be using this transfer agent, they’re going to be invited to come and view their existing holdings. And that way, when it comes to the reggae process, you can also communicate in advance of that saying, Hey, we’re doing a reggae as well come and check it out. Have any questions reach out? That way? You’re kind of layering your communication and starting from, yes, let’s get everybody on board. Let’s let them know what we’re doing. Let’s let them know we’re doing a reggae Plus, when they get to the reggae plus, then it’s a communication around timing, right? Because it’s also key. I mean, as you’re aware, James, I mean, you’re not decisioning on the spot or not, you know, as they click that button, as they’re used to doing with sending their EFT to, you know, their football pool, as you said, there’s a time process, right, they have to go through the process, they have to go through AML, KYC, they have to make sure the money gets pulled and cleared. And that process takes time. So, you know, they have to understand that there’s going to be a delay between pressing that invest button and getting their shares on the transfer agents platform, showing us cleared and closed by the broker dealer.
Jim Caboy 18:01
And just what you’re saying is they have to know it. This, this is all still new. Like I said before, people don’t all realize the process issuers come to us and they you know, they don’t, can I get my money tomorrow? We’re gonna have to raise 75 million before we give it to you. But did you know, it’s a real question? And it makes sense, because they just don’t so imagine someone’s grandma, grandpa who bought the shares, and just really I have to put a social security number and on? Why would I do that? And I answer that question, I explained, this is a security, this isn’t a lotto ticket, you know, we need to know who you are and clear who you are. And, and they get it. And I think the more even as an issuer that you can explain and put to this process to these folks that are going to give you that money. It really, because no one’s really, really reading that offering circular with all the terms, you want to hit the notes that I get it, but they need to know the process, they don’t. And while I might be able to close one application, in three days, if the money comes out and clears and all the things come through AML and identity in seconds, great. But most of the time or the most maybe not. There’s people put x’s in for their social, they’ll put it off in digit, if they’re doing it on their phone, their email might be off by a one letter or you know, Gmail is something I see quite a lot the so these things are what caused the delay or a little extra time. And, you know, we’ve tried to bake that up in the beginning when there’s a confirmation email that hey, soon as you hit invest, there’s an email it says your applications in now be patient. This could take 14 to 30 days. Even if that’s the second line on an email, some people don’t see that and they don’t understand and that’s fine. They could allow that email also gives a contact information so they can come to me and my firm and we can explain that process and educate them. But you know, I all this from what you know what we’re I think educating or just highlighting timelines, and letting that investor know the status around everything all times is what they’re always checking in on. And I think the more you can do that, and if even if you can, as the issuer, because you’re trying to do what you do, that’s why the rest of the, you know, the folks here in the ecosystem to handle those parts and to keep keep making you more money and make you a bigger get you to that IPO stage. Because that’s the other question. They all
Julien Phipps 20:33
There you go. Well, Jason, a couple of quick points to from your end. Now, this is relating to obviously, the compliance and, you know, in terms of a timeline, how, you know, how much time lead time do issuers need in terms of getting that cap table information or, or trying to retrieve? Are there steps concrete steps that they can do to get that information? And then then I’ll you know, wanted to ask a little bit more to, you know, the panel as well, as it relates to real estate and compliance. Are there any type of structures that are being used today by, you know, particularly real estate funds that, that we’re seeing more of, you know, maybe something that relates to the marketplace?
Jason Futko 21:17
Yeah, I mean, for sure, the process for us is, as I mentioned early, it’s fairly simplistic when you know, you’re going with a TA, us or any other TA, you go through the onboarding, onboarding, like I said, we’ll send out an email, there’ll be a list of things we need to get from you, in order to move forward for compliance. The fairly simple, the biggest, obviously, being the cap table report, we give a specific format that we’d like to see it NCS CSV template, keeps it fairly straightforward. We don’t usually have too much trouble onboarding. When it comes to getting the data in the right format. Sometimes you get, you know, the issuers have done four or five different fundraisers in the past, from different brokers, different TAs, and they don’t necessarily have it all cohesive. So it’s bits and pieces, that takes a little longer. So if you’re, if you’re finding yourself with lots of information to upload, give yourself a little extra time to get it in the system. I mean, from from the uploading standpoint, it doesn’t take long on our end to get things loaded. Once we have them in the right format, we have the right information, we have those compliance documents that we can tick off.
Julien Phipps 22:33
Yeah, so it’s not unusual to have like a month, two months, you know, to have that lead up, right?
Jason Futko 22:39
Yeah, for sure. I mean, you’re you’re gonna have that time anyways, between the time you select your TA filing your your submission with the SEC, you’re gonna have 30 plus days, you know, there’s people I know that have still waiting six to nine months to get things back and forth, because they’ve had so many questions with the SEC, or there’s the ones that are quick, and they happen in 60 days, but you’re still going to have that time to get things done. Just don’t slack off and think, you know, let’s leave it to the end, let’s get it done at the beginning so that when, you know, Jim’s term is up, and you know, it’s live on the site, you don’t have all these questions coming up disrupting the process, because you really just want that to run smoothly.
Julien Phipps 23:22
Yeah, for sure. Now, a lot of fundraises are happening on the issuers site, versus sometimes going to, you know, a licensed funding portal. And I think that for real estate, a lot of times we’re seeing that the issuer is actually wanting to have it live and breathe on on their website for REG CF reggae raises. Now, you know, this is, of course, by choice for the issuer. But when we’re seeing it on site, sometimes that’s purposefully done, especially certain types of structures, legal structures, where, you know, cost of capital is also in the back of the mind in terms of, you know, the the folks that are setting up these real estate, you know, funds and, and, you know, how the profitability is built into their sheets. You know, we’re seeing some companies sometimes that are setting up SBA loans with, you know, the government where they can’t actually have, you know, seven or 8% of the capital go to certain platforms, they rather have it on, you know, a controlled self hosted through their website where broker dealer, you know, Rialto and such have a much better, you know, cost structure that helps. So, in that sense, I mean, we’re seeing some of these structures happen more frequently, aren’t we, James, and maybe we could speak to a little bit of that as it relates to getting compliant and get things up and running.
Jim Caboy 24:45
Yeah, and as far as the finance and who owns what percent and you know, I I’m gonna say I’m as even as the broker dealer when you come to me and ask me all these these little nitty grommets and what did your lawyers say? Because I we’re not going to provide that legal advice. But you know, I have an idea. And if you ask a question I pretty much know is that something you’re going to want legal advice, check with your lawyer on how you’re setting that up. But when it comes to, you know, the reggae is we’ll start there, you know, to use your own site and to put technology on there so we can get all that. That, to me is it’s, you’re putting everything in one spot for everyone to look, there’s no confusion, where we’re avoiding any regulatory issues where if you’re mixing it on your normal site, that everything on that site might be considered part of the offering circular, just because the wind blew the right day that the SEC happened to go to your website. So you know, I structure wise, as far as that reggae, don’t put anything on your own website, create one for this purpose, and or lead there from your website. So it’s got to be a direct link, you know, there are a few little things you can always check in on there. But you know, another thing I’ve been seeing and speaking of these sites is if it’s a direct participation type deal, which I think some of these funds and real estate deals tend to be, there needs to be a little lead time because it wants the broker dealer is involved. Now FINRA wants to make sure that anything that’s advertised, where the broker dealer is involved and reading my logo, or you know, powered by Rialto, or something along those lines, so that they, you know, investors realize that there’s a broker dealer involved, this is a real deal. Federal wants to review all of that material to make sure that it meets their standards, meaning you’re not saying this thing’s guaranteed to scream, though, it’s screaming at the moon. And of course, we don’t try not to put those things in there. Or say sec, or FINRA approved because they approved nothing, you know, so there is a little lead time that we’ll need to get that those materials, anything that a broker dealer is on, so that we can get those in front of FINRA, which of course, they pay charge a little fee for that. So, you know, Bo, we’re talking $125, or, you know, maybe 600, if you need to get it done in a day or two. Usually, we take PDFs and kick them over there, and they give them a review. And their comments are usually, you know, you’re pressuring folks here with this time, you know, we have to act now things like that. They scared scares them. So they don’t want to that stuff in there. Of course, you can do that in a car, commercial, or anywhere else, but not for security. And that’s just the way it is. It’s not changing. So just want to bake that in there as far as timing we’ve spoke about and, you know, that will need to be reviewed. So when you have materials and things too, and you’re working with a broker dealer like Rialto, though, we like to see your marketing material, I might not might not have anything to do with me, but put in front of me, maybe I have 20 minutes to give a review and go, you definitely don’t want to say this, this this, or this is what the regulator’s might think because in the end, that’s the last one you want knocking on your door, if they don’t think you’re doing it, right. So because it’ll slow you down, you’ll have to explain. And if anything gets out along those lines, investors don’t want to one sec ask them a question. So you want to avoid the you know, things like that at all costs.
Julien Phipps 28:15
Well, that makes sense. Jim? Yeah. Thanks for that
Jim Caboy 28:17
DPP and just this is this is I just usually see it with real estate. That is that little thing we need to get over to FINRA for review in their ad Reg, great point
Julien Phipps 28:27
about the content and the campaign compliance aspect as well.
Jim Caboy 28:30
And since that website is public, and anyone can go to it, that’s considered advertising, even if I didn’t send that link to someone, if Julien’s little sister just happened to stumble on that website wanted to buy something. It’s considered advertising solicitation. So it is what it is. That’s how they see it. So we got to get getting live,
Julien Phipps 28:52
like a billboard as I was told, you know, there you go. Excellent. Well, we’re wrapping up to time. I think we got about three minutes left. But generally, maybe some closing thoughts about, you know, compliance. And and maybe we’ll start with you, Jason, any nuggets of wisdom you want to leave behind for the crowd here?
Jason Futko 29:11
Yeah, I mean, I’m just gonna keep driving on the same point, get yourself organized, get the information done, early, come prepared. You don’t want to drag this process on any more than you have to. It’s it can get unwieldy if you know, you’re not prepared. And you know, you make people go through hoops more than once with James guy to review the same thing three different times because it was edited three different times. It’s wasting time. If your lawyer has to do it, it’s wasting time and money. So you just make sure you’re prepared. Communicate the process, not just to your internal team, to your professionals that you’re using in the ecosystem. Make sure that your shareholders are aware when they’re transferred when you’re moving to a transfer agent or where, you know, they’ll be contacted and they’ll to find that information, and, you know, keep that involved in that process, you know, they may come back, who knows, you know, it’s not the first time that a previous investor invests in your current round. So keeping them apprised, letting them know you’re doing another round of financing, and preparing them for the timelines and everything else, like communication being key. And just, you know, I guess stick to it.
Julien Phipps 30:24
Exactly. Yeah. And I would guess I would add to that is just like, a lot of times is, is if that process is unfamiliar, or perhaps if it’s not a comfortable role for, you know, people in your your organization, sometimes looking outwards, and bringing somebody in to handle that process might really be worth the spend as well, just so that you’ve got someone dedicated to it seems we’ve seen that on our end, as well, it can be pieced together, but with with a lot of effort, or perhaps someone can drive that forward on your organization’s behalf. Jim few final closing words, and we’ll bring Oscar back in the fold.
Jim Caboy 30:59
Yeah, I’ll just just jump on with because I’m the wet blanket compliance guy, you know, compliance is everybody’s job in this entire process. And I would say in that line for years, it’s what kept me from getting beat up on trading floors, but it’s everyone’s job, but not everybody focuses on it. So sometimes you need to plug in those that, that that’s their focus. And that’s, you know, we’re a broker dealer. Our hands are in the drawer on this one. And I studied all day to say drawer and not draw off being from Jersey here. But it so it’s important sometimes to plug the right folks. And if you have a shareholder list, that’s 3000 5000 shareholders from six different offerings. Is someone in your your firm that, you know, while you’re trying to make widgets, do you have the right person who can keep all that in spot and actually communicate and do the things that needed to be you know, sometimes, you just have to get the right person and put put in that spot to be able to do things. So.
Julien Phipps 32:01
Excellent. Well, thank you, everybody. I’m going to turn this over. We’ve heard the compliance side. Hopefully that added value to everyone. And thank you very much for your time. Over to you Oscar. Welcome back. All right. All right. I’ll tie a bow tie while we wait. Sometimes we need the intermission think,