SEC Adopts Regulation Permitting Unregistered Crowdfunding Securities Offerings

On October 30, the SEC completed a two-year effort to implement the exemption from Securities Act registration for “crowdfunding” securities offerings contained in Section 4(a)(6) of the Act by adopting Regulation Crowdfunding in substantially the form it had proposed. Crowdfunding is a method used by start-ups and other small businesses to raise money through solicitations on the Internet. These enterprises historically have raised funds primarily by soliciting donations or advance purchases of finished products. The new regulation will allow them to expand their fundraising methods by soliciting investments in their securities through a registered broker or a “funding portal" acting as an intermediary between the issuer and investors.

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