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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…
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…
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…
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…
Employee Equity Compensation Under Rule 701. Rule 701 allows companies to offer securities to their employees and certain other persons without the need to file a registration statement. Specifically, non-reporting or private companies may offer and sell securities under a written compensatory benefit plan or contract for their employees, directors, general partners, trustees, and officers, as well as consultants and…
Offshore Offerings Under Regulation S. Companies that want to go outside of their own state for an alternative source of capital but do not want to go through the registration requirements might want to consider Regulation S. Regulation S provides an exemption for offers and sales of securities, debt or equity, outside the United States, on the following general conditions:…
Exempt Offerings for Other Types of Markets or Purposes. In our previous blog series on raising capital through exempt offerings (available here), we looked at some of the most commonly used exemptions from the federal registration requirements, including those under the JOBS Act. In another blog series on Regulation D offerings (available here), we focused on various exemptions under Regulation…
Allowing More Access to Capital? Proposed Amendments to Rule 504 of Regulation D. As we explained in our previous blog post on exempt offerings under Regulation D, Rule 504 of Regulation D currently provides an exemption for offerings up to $1,000,000 in a 12-month period.[1] Although Rule 504 allows general solicitation in certain limited situations, a major downside to Rule…
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…
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…