Are Electronic Signatures Valid for Alternative Investments?
October 10, 2019 | Tim Boykin | Wealthforge.com
New technology tools have enabled online processing of alternative investments. However, a fundamental question when using such tools is whether or not they comply with federal and state regulations. Primarily, industry participants are concerned with whether electronic signatures can serve to form a valid contract for the sale of securities.
ESIGN and UETA
On a federal level, the Electronic Signatures in Global and National Commerce Act (ESIGN) states that electronic signatures are allowed in interstate commerce. However, as ESIGN regulates where federal law applies, contracts are often also governed by the laws of the states in which the transactions take place. This may be particularly true for real estate agreements or real estate-related securities.
That is where the Uniform Electronic Transactions Act (UETA) comes into play. UETA is a state-level uniform law that gives legal recognition to electronic signatures, records, and contracts. So far, 47 states have adopted UETA, with the remaining three states—Illinois, New York, and Washington—having adopted other laws that recognize electronic signatures.
