Late last month, the Securities and Exchange Commission (SEC) finally
released its proposals
setting out the crowdfunding framework as required by Title III of the
Jumpstart Our Business Startups Act 2012 (JOBS Act). The rules, once finalized,
will become known as “Regulation Crowdfunding,” and are intended to provide
another avenue to entrepreneurs and startups looking to raise capital outside
of the more heavily regulated securities framework. The proposals attempt to
bring crowdfunding under the securities law umbrella by establishing some
protections for both prospective investors and companies looking for
investment.
The JOBS Act established a new Section 4(a)(6) that exempts certain
crowdfunding transactions from registration under the Securities Act of 1933.
There are three main prongs to qualifying for the exemption, which can be found
by clicking here and viewing the full text of Darren’s blog.