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SEC Proposes Regulation to Permit Securities-Based Crowdfunding Without Registration

22 November 2013

SEC Update

The SEC recently proposed a regulation to implement the exemption from Securities Act registration for “crowdfunding” securities offerings that was dictated by the Jumpstart Our Business Startups Act (JOBS Act). Crowdfunding is a funding method used by startups and other small businesses to raise limited amounts of capital from individuals through the Internet. “Regulation Crowdfunding” would provide the framework for these firms to move beyond obtaining funds through donations or advance purchases of finished products to soliciting individuals to invest in the securities of their enterprises. Eligible issuers could raise up to $1 million during a 12-month period under the regulation through the offer and sale of securities made through a registered broker or a “funding portal” acting as an intermediary between the issuer and prospective investors. Offers and sales of securities under the proposed regulation would remain subject to the antifraud provisions of the securities laws and to state registration and offering requirements.

Read more: SEC proposes regulation to permit securities-based crowdfunding without registration


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