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Federal Crowdfunding Goes into Effect on May 16, 2016 (Part VI)

June 14, 2016

Fix Crowdfunding Act.  

We have been blogging about federal crowdfunding in this blog series this past month or so. As you know, 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 in certain ways.[1] For a detailed analysis of the final rules, please see our previous blog series “Is It Time To Do Crowdfunding To Raise Money?: SEC Releases Federal Crowdfunding Final Rules.” Even before the final rules went into effect, however, efforts to amend Title III had been underway.… Read the rest

Federal Crowdfunding Goes into Effect on May 16, 2016 (Part V)

June 7, 2016

SEC Small Entity Compliance Guide and Compliance and Disclosure Interpretations for Issuers.

On May 13, 2016, the Securities and Exchange Commission (“SEC”) released two guidance documents on crowdfunding for issuers: “Regulation Crowdfunding: A Small Entity Compliance Guide for Issuers” and “Regulation Crowdfunding: Compliance and Disclosure Interpretations (C&DIs).” [1]  For details of the final rules, including requirements for issuers, please see our previous blog series “Is It Time To Do Crowdfunding To Raise Money?: SEC Releases Federal Crowdfunding Final Rules.” The compliance guide and C&DIs explain the final rules in plain English, some of which we highlight below.… Read the rest

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

Is It Time To Do Crowdfunding To Raise Money?: SEC Releases Federal Crowdfunding Final Rules (Part 5)

December 3, 2015

Investor Qualification.

Each time before accepting any investment commitment, an intermediary must have a reasonable basis for believing that the investor satisfies the investment limitations discussed above; in doing so, an intermediary may rely on an investor’s representations concerning the investor’s annual income, net worth, and the amount of the investor’s other investments made under the crowdfunding exemption, unless the intermediary has reason to question the reliability of such representation.[1] An intermediary must also obtain from the investor: (i) a representation that the investor has reviewed the intermediary’s educational materials discussed above, understand that the entire amount of his or her investment may be lost, and is in a financial condition to bear the loss; and (ii) a questionnaire completed by the investor demonstrating the investor’s understanding regarding restrictions on the investor’s ability to cancel an investment commitment, resale restrictions, and risks of loss.… Read the rest

Is It Time To Do Crowdfunding To Raise Money?: SEC Releases Federal Crowdfunding Final Rules (Part 4)

December 1, 2015

Funding Portal Registration.

As expected, a funding portal must register with the SEC by filing a complete Form Funding Portal (to be amended whenever previously submitted information becomes inaccurate) and become a member of a national securities association[1]; a funding portal that is registered this way is exempt from the broker registration requirements.[2] A non-U.S. portal can register, too, but its registration is conditioned upon there being an information sharing arrangement in place between the SEC and the competent regulator in the non-U.S.… 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.