Indiana official warns against new investment tool

Indiana's secretary of state is urging investors to thoroughly vet new online investment operations coming under a new federal law.

Connie Lawson warns that the new "crowdfunding" tool approved under that law could attract fraudulent investors.

Crowdfunding allows many donors to give small amounts of money to help fund small startup businesses. Congress ordered the Securities and Exchange Commission last month to develop rules for using the new tool within 270 days.

Lawson cautions that until those new rules are in place any crowdfunding offers are unlawful.

She said crowdfunding holds the potential to work as a fundraising tool for legitimate startup businesses, but "there is also great potential for fraud" and Indiana investors need to do their homework before investing.

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