A California tech start-up currently in the market with a $50 million Regulation A offering called YayYo has seen an exodus of senior leadership this month amid a storm of criticism over the company’s promotional campaign, which has included cable TV ads and online videos by rappers and TV character actors extolling investment in the company’s stock as an opportunity for retail investors to get in on the next Uber or Lyft.
Remy El-Batrawi, CEO of YayYo, announced on May 5 in a filing that Wall Street financier Terren Peizer and YaYo’s president Anthony L. Davis had resigned from the company’s board. The announcement came within days of an article published in Business Insider questioning the company’s marketing efforts to Main Street investors using highly promotional TV ads with paid actors that glossed over the risks of investing in the company before it had developed a viable product.
YayYo claims to be building a ridesharing app that aggregates rideshare provider information in order to help a rider find the cheapest fare among different operator networks such as Uber and Lyft. The app can be downloaded in iOS and Android version but isn’t functional yet, says Matt Bretzius of FischTank, the company’s outside pressperson.
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On May 3 the Securities and Exchange Commission sent out letters to companies who had failed to file their 1-K annual reports this year, reminding them they were supposed to file.
The filing, an abbreviated version of the traditional 10-K filed by larger companies, requires audited financial statements and a management report discussing year-to-year performance along with a complete update of the company’s business, ownership and executive staff.
The Securities and Exchange Commission’s enforcement division delivered subpoenas last week to companies who have fallen victim to an alleged advance-fee scheme tied to Regulation A offerings. The scheme, which was first reported by Growth Capitalist in March, is believed to be led by a Southern California man, Steven J. Muehler, who was permanently banned by the SEC last year.
In another sign of consolidation in the crowdfinance market in the face of underwhelming growth, the market’s two main trade associations are planning to merge later this year. The Crowdfunding Intermediary Regulatory Advocates (CFIRA) and the Crowdfunding Professional Association (CfPA) are in talks to merge into a single trade group