The SEC Issues Proposed Crowdfunding Rules

November 12, 2013

Opening investing to the crowd but with a lot of strings attached

By: Allan Grauberd and Jason Canales

Moses & Singer Client Alert

On October 23, 2013 the United States Securities and Exchange Commission (“SEC”) released its proposed rules regarding equity-based crowdfunding.  These proposed rules were issued almost a year and a half after Congress passed the Jumpstart Our Business Startups (JOBS) Act in April 2012.  In our April 2012 Client Alert we highlighted certain key takeaways of the CROWDFUND Act (adopted as part of the JOBS Act) and noted that while the crowdfunding exemption represents a substantial revision of the securities laws governing capital raising, companies will still be required to comply with numerous investor-protection requirements.  As anticipated, the SEC’s proposed rules, if adopted, will contain detailed and strict requirements for issuers, intermediaries and investors to meet when raising funds through the crowdfunding exemption, including, among other things, strict disclosure and reporting requirements.  In this Client Alert we highlight some of the key requirements set forth in the proposed rules. 

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