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Federal Crowdfunding–Finally Here–Goes into Effect on May 16, 2016 (Part IV)

May 31, 2016

FINRA’s Funding Portal Rules.

The federal crowdfunding final rules require that each intermediary in a crowdfunding transaction be registered with the Securities and Exchange Commission (“SEC”) either as a broker-dealer or a funding portal and be a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”), which is currently the only registered national securities association. For details of the final rules, including registration and disclosure requirements for intermediaries, please see our previous series “Is It Time To Do Crowdfunding To Raise Money?: SEC Releases Federal Crowdfunding Final Rules.” FINRA has finalized its funding portal rules and the SEC approved them on January 29, 2016, making them effective as of that date.Read the rest

Federal Crowdfunding–Finally Here–Goes into Effect on May 16, 2016 (Part III)

May 24, 2016

SEC: A Small Business Compliance Guide on Registration of Funding Portals.

On February 29, 2016, the Securities and Exchange Commission (“SEC”) issued “A Small Entity Compliance Guide: Registration of Funding Portals.” [1] The full text of the investor bulletin is available here. One of the requirements for crowdfunding under JOBS Act is that it be done through an intermediary; no issuer can do crowdfunding directly without using one. [2] For details of the final rules, including registration and disclosure requirements for intermediaries, please see our previous series “Is It Time To Do Crowdfunding To Raise Money?: SEC Releases Federal Crowdfunding Final Rules.” The compliance guide focuses only on the registration requirements.Read the rest

Federal Crowdfunding–Finally Here–Goes into Effect on May 16, 2016 (Part II)

May 17, 2016

SEC Investor Bulletin: Crowdfunding for Investors.

Crowdfunding under federal law became legal on May 16, 2016, but efforts to prep potential investors and intermediaries have been in the works for much longer. On February 16, 2016, the Office of Investor Education and Advocacy of the Securities and Exchange Commission (“SEC”) issued “Investor Bulletin: Crowdfunding for Investors” [1] to educate investors about what it means to make a crowdfunding investment, what to keep in mind, and how. The full text of the investor bulletin is available here.Read the rest

Federal Crowdfunding Goes into Effect on May 16, 2016

May 10, 2016

It is official—federal crowdfunding finally goes into effect on May 16, 2016.

Title III of the JOBS Act, also referred to as the “CROWDFUND Act (Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act of 2012),” exempts up to $1 million crowdfunded securities from the federal registration requirement when the transaction is conducted through an intermediary that is either a broker or a funding portal.[1] For a detailed analysis of the federal law and related topics, please see our previous posts “Crowdfunding: Is It Right for My Business,” “Is It Time To Do Crowdfunding To Raise Money?: SEC Releases Federal Crowdfunding Final Rules,” and “An Easy Way for Texas Companies To Raise Money?Read the rest

Crowdfunding Gone Wrong: Some Points of Caution SEC Investor Alert: Ascenergy LLC Oil and Gas Crowdfunding Scheme

January 19, 2016

We’ve covered crowdfunding extensively in our previous posts “Crowdfunding: Is It Right for My Business,” “Is It Time To Do Crowdfunding To Raise Money?: SEC Releases Federal Crowdfunding Rules,” and “An Easy Way for Texas Companies To Raise Money? A Discussion of the Texas Crowdfunding Exemption.” As crowdfunding gains popularity, not only has it proved to be a process of trial and error (see, for example, our previous posts “Eureeca: A Cautionary Tale on How Not To Do Crowdfunding” and “Update on Eureeca Capital”), but schemes to defraud unsophisticated investors with the allure of crowdfunding also seem to have been on the rise.… Read the rest

Clarifying How Companies Can Raise Money: Making Things a Little Clearer And, Perhaps, Easier? SEC Proposes Amendments to Rule 147 Intrastate Exemption and Rule 504 of Regulation D (Part 2)

January 14, 2016

More on the Rules for an Offering in a Single State

Rule 147 Intrastate Exemption: Proposed Amendments.

The proposed amendments would: (1) eliminate the current restriction on offers, while continuing to require that sales be made only to residents of the issuer’s state; and (2) redefine what it means to be an “intrastate offering” and ease some of the issuer eligibility requirements, among other things. The SEC noted that the use of the Internet for offerings makes it difficult for issuers to limit offers to in-state residents, especially in the context of intrastate crowdfunding.… Read the rest

Clarifying How Companies Can Raise Money: Making Things a Little Clearer And, Perhaps, Easier? SEC Proposes Amendments to Rule 147 Intrastate Exemption and Rule 504 of Regulation D (Part 1)

January 7, 2016

October was a busy month for the Securities and Exchange Commission (SEC). On October 30, 2015, the day the agency finally voted to adopt the crowdfunding final rules, it also issued proposed rules to amend: (1) Rule 147, which currently provides a safe harbor for compliance with the intrastate exemption; and (2) Rule 504 of Regulation D, which provides an exemption for certain offerings conducted in compliance with applicable state law.[1] (For more discussion on Rule 504 of Regulation D) The full text of the proposed rules is available here.… Read the rest

An Easy Way for Texas Companies To Raise Money? A Discussion of the Texas Crowdfunding Exemption (Part 5)

January 5, 2016

Texas Crowdfunding Portal Registration and Activities (in Detail).

Simplified/Streamlined Registration Process. The simplified registration process for TCPs, which we discussed previously, is designed so that TCPs are subject to fewer regulatory requirements than general securities dealers, because they are limited in what they can do.[1]

No Investment Advice. Of note, a TCP is prohibited from offering investment advice or recommendations, so in listing issuers on its platform, it is important for the TCP not to provide an implicit endorsement or recommendation.… Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.