LOS ANGELES-With the SEC lifting the general ban on solicitation of funds and an increasing number of commercial real estate investments taking place online by inexperienced investors, concern over how sites deal with sensitive information is rising. Jilliene Helman, CEO and founder of Realty Mogul, a locally based marketplace for accredited investors to pool money online and buy shares of pre-vetted investment properties, tells GlobeSt.com that before investing, investors should be aware of the security measures sites take with this information.
“Our platform is PCI compliant, and we have data and security policies in place as we already deal with sensitive information including social-security numbers in order to issue annual tax documentation and reporting,” says Helman. “Investors should check with executive management at crowdfunding companies to ensure they are PCI complaint and have the latest security standards in place.”
According to the website PracticalEcommerce, the major credit card issuers created PCI (Payment Card Industry) compliance standards to protect personal information and ensure security when transactions are processed using a payment card. All members of the payment card industry (financial institutions, credit card companies and merchants) must comply with these standards if they want to accept credit cards. Failure to meet compliance standards can result in fines from credit card companies and banks and even the loss of the ability to process credit cards.
As GlobeSt.com recently reported, methods for verifying accredited investors have been clarified by the SEC. Helman says her firm plans “to make Reg D 506(c) investments, which require additional investor verification.” She adds that her firm is affiliated with a broker-dealer, “so our broker-dealer partner is able to coordinate the investor verification process. This is currently done offline.”
Helman adds that whether or not there are reasons to be concerned with investor privacy due to the SEC's verification requirements and platforms collecting this information depends on the platform itself. Checking for PCI compliance and for practice of updated security standards can help limit privacy risks.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
