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SEC Adopts Crowdfunding Rules

by Ken Tysiac | Nov 03, 2015   ()

In separate votes Friday, the SEC adopted new rules and proposed amendments designed to give small businesses more access to capital while providing protection for investors.

Companies will be permitted to offer and sell securities through crowdfunding under rules the SEC adopted Friday. In addition, the SEC voted to propose amendments to existing rules to facilitate intrastate and regional offerings of securities.

The vote on crowdfunding completed the SEC’s major rulemaking mandated under the Jumpstart Our Business Startups (JOBS) Act, P.L. 112-106, according to SEC Chairman Mary Jo White.

The new crowdfunding rules, which will take effect 180 days after they are published in the Federal Register, give individuals the ability to invest a limited amount of capital in securities-based crowdfunding transactions.

The rules limit the amount of money an issuer can raise through crowdfunding and require issuers of securities through crowdfunding to make certain disclosures about their businesses and securities offerings.

In addition, the rules create a regulatory framework for the funding portals that facilitate the crowdfunding transactions.

Under the rules the SEC adopted:

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Source: Journal of Accountancy

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