--- title: SEC Proposes Crowdfunding Rules for Private Securities Offerings description: "Have you ever \"crowdfunded?\" On October 23, the Securities and Exchange Commission (SEC) proposed regulations that may expand your opportunity to do" image: https://blog.stpub.com/hs-fs/file-370986837-jpg/images/crowd_funding_cropped.jpg --- [![Specialty Technical Publishers](https://blog.stpub.com/hubfs/STP-logo-white-orange.png)](http://www.stpub.com/) - [My Account](http://stponline.stpub.com) - 1-800-251-0381 # Audit, Compliance and Risk Blog ## [SEC Proposes Crowdfunding Rules for Private Securities Offerings](https://blog.stpub.com/bid/189578/SEC-Proposes-Crowdfunding-Rules-for-Private-Securities-Offerings) Posted by [Jon Elliott](https://blog.stpub.com/author/jon-elliott) on Wed, Nov 06, 2013 - [Tweet](https://twitter.com/share) ![http://www.stpub.com/securities-aw-a-guide-to-the-1933-and-1934-acts-and-their-amendments-including-sarbanes-oxley-and-dodd-frank-online](https://blog.stpub.com/hs-fs/file-370986837-jpg/images/crowd_funding_cropped.jpg?width=215&height=153&name=crowd_funding_cropped.jpg)Have you ever "crowdfunded?" On October 23, the [Securities and Exchange Commission](http://www.stpub.com/securities-aw-a-guide-to-the-1933-and-1934-acts-and-their-amendments-including-sarbanes-oxley-and-dodd-frank-online) (SEC) proposed regulations that may expand your opportunity to do so… In this increasingly popular fundraising mechanism, people with creative ideas post proposals on dedicated websites (such as Kickstarter for creative projects). People intrigued by the project provide contributions, and typically receive acknowledgements and perhaps suitable gratuities (tickets to the movie, copies of the game, etc.). A few websites have pushed these efforts closer to traditional small-cap investing—for example the Mosaic website facilitates investments in financing for solar energy projects. But these efforts have been limited by provisions of federal securities laws designed to protect investors ... although those limitations are changing. ### **JOBS Act Provisions for Crowdfunding** The 2012 Jumpstart Our Business Startups (JOBS) Act revises federal securities laws to allow small companies to grow before having to register securities or stage an initial public offering (IPO). Title III adopts a new Section 4A into the 1933 Securities Act, outlining a new crowdfunding exemption from requirements to register securities, for qualifying U.S.-based companies in compliance with the following conditions: - Make no more than $1 million in sales to all investors in the 12 months up to the exempt transaction (whether or not made under this exemption. - Each investor invests no more than the following amount in the 12 months up to the transaction: - Transaction is conducted through an “intermediary” — broker or “funding portal” —that complies with newly established registration and reporting requirements. - Issuer meets information filing, investor notice, and intermediary compensation rules that the SEC is to define. ### **SEC's Proposed Rules** [SEC ](http://www.stpub.com/securities-aw-a-guide-to-the-1933-and-1934-acts-and-their-amendments-including-sarbanes-oxley-and-dodd-frank-online)was to have published these regulations by December 2012, but is running late. Despite the delay, SEC's new proposal hews close to the lines established by the JOBS Act and other registration and exemption provisions in the federal securities acts. - Requirements for companies SEC’s proposal repeats the requirements noted above, specifying that the issuing company disclose the following basic information about the company and the offering: - Requirements for intermediaries Most of the new details to be found in SEC’s proposal involve requirements for SEC-registered third party intermediary – either a broker-dealer or a newly-defined “funding portal.” SEC also proposes to require that intermediaries conduct these transactions exclusively through online platforms. They also must meet investor information and protection goals by doing the following: Conversely, the proposed rules would prohibit funding portals from all of the following: - Requirements for investors SEC's proposal copies the limits on investment set forth above, in total amounts and relative to their assets. Investors generally cannot sell these shares for at least a year. ### **Self-Assessment Checklist** These rules are only proposals, so nobody can rely on them yet. However, SEC is moving to finalize them next year, so it’s not too early to start making contingency plans. Consider the following: Does my organization anticipate raising investment funds by selling securities? - Does the organization already have securities registered with SEC? - Has the organization already issued unregistered securities, under an exemption from registration provided by federal securities laws and SEC rules? If the organization is considering raising no more than $1 million per year, has it reviewed “crowdfunding” provisions of the JOBS Act, and SEC’s proposed rules? Am I an investor, interested in investing in non-public companies? - If so, have I considered whether to invest via “crowdfunding” websites, once SEC’s rules become final? **Where Can I Go For More Information?** - SEC crowdfunding [proposal](http://www.gpo.gov/fdsys/pkg/FR-2013-11-05/pdf/2013-25355.pdf) - JOBS Act [text ](http://www.gpo.gov/fdsys/pkg/PLAW-112publ106/pdf/PLAW-112publ106.pdf) **Specialty Technical Publishers (STP)** provides a variety of publications intended to facilitate clients’ understanding of and compliance with regulations. These include: - [Securities Law: A Guide to the 1933 and 1934 Acts and their Amendments, including Sarbanes-Oxley and Dodd-Frank](http://www.stpub.com/securities-aw-a-guide-to-the-1933-and-1934-acts-and-their-amendments-including-sarbanes-oxley-and-dodd-frank-online) - [SEC Disclosures Checklists](http://www.stpub.com/sec-disclosures-checklists-including-financial-statement-mda-and-sarbanes-oxley-checklists-online) - [Directors' and Officers' Liability](http://www.stpub.com/directors-and-officers-liability-online) [![Like What You've Read? Subscribe to Our Blog Now](https://no-cache.hubspot.com/cta/default/129776/432bf34d-5444-4a84-9636-a15f85c32125.png)](https://cta-redirect.hubspot.com/cta/redirect/129776/432bf34d-5444-4a84-9636-a15f85c32125) About the Author [![http://www.stpub.com/securities-aw-a-guide-to-the-1933-and-1934-acts-and-their-amendments-including-sarbanes-oxley-and-dodd-frank-online](https://blog.stpub.com/hs-fs/file-17039548-jpg/images/jon_elliott_w_border.jpg)Jon Elliott](http://en.stpub.com/company/authors/jon-f.-elliott) is President of [Touchstone Environmental](http://en.stpub.com/company/authors/touchstone-environmental) and has been a major contributor to STP’s product range for over 25 years. He was involved in developing [16 existing products](http://en.stpub.com/company/authors/jon-f.-elliott), including [Securities Law: A Guide to the 1933 and 1934 Acts and their Amendments, including Sarbanes-Oxley and Dodd-Frank](http://www.stpub.com/securities-aw-a-guide-to-the-1933-and-1934-acts-and-their-amendments-including-sarbanes-oxley-and-dodd-frank-online) and [Directors' and Officers' Liability](http://www.stpub.com/directors-and-officers-liability-online). Mr. Elliott has a diverse educational background. In addition to his Juris Doctor (University of California, Boalt Hall School of Law, 1981), he holds a Master of Public Policy (Goldman School of Public Policy [GSPP], UC Berkeley, 1980), and a Bachelor of Science in Mechanical Engineering (Princeton University, 1977). Mr. Elliott is active in professional and community organizations. In addition, he is a past chairman of the Board of Directors of the GSPP Alumni Association, and past member of the Executive Committee of the State Bar of California's Environmental Law Section (including past chair of its Legislative Committee). You may contact Mr. Elliott directly at: [tei@ix.netcom.com](mailto:tei@ix.netcom.com). ###### photo credit: [lulupinney](http://www.flickr.com/photos/lulupinney/8361107950/) via [photopin](http://photopin.com) [cc](http://creativecommons.org/licenses/by-nc-nd/2.0/) Tags: [Corporate Governance](https://blog.stpub.com/topic/corporate-governance), [Business & Legal](https://blog.stpub.com/topic/business-legal), [SEC](https://blog.stpub.com/topic/sec), [JOBS Act](https://blog.stpub.com/topic/jobs-act) ### Follow Me ### Subscribe by Email ### Browse by Topic Area - [Accounting & Tax ](https://blog.stpub.com/topic/accounting-tax) - [Business & Legal ](https://blog.stpub.com/topic/business-legal) - [Corporate Governance  ](https://blog.stpub.com/?Tag=Corporate+Governance) - [Environmental ](https://blog.stpub.com/?Tag=Environmental) - [Global ](https://blog.stpub.com/?Tag=Global) - [Health & Safety ](https://blog.stpub.com/topic/health-safety) - [Internet ](https://blog.stpub.com/?Tag=Internet) - [Transportation ](https://blog.stpub.com/?Tag=Transportation) ### Browse by Tag - [Environmental (344)](https://blog.stpub.com/topic/environmental) - [Business & Legal (309)](https://blog.stpub.com/topic/business-legal) - [Environmental risks (300)](https://blog.stpub.com/topic/environmental-risks) - [Health & Safety (296)](https://blog.stpub.com/topic/health-safety) - [EPA (283)](https://blog.stpub.com/topic/epa) - [Terms & Conditions](https://stphub.stpehs.com/wp-content/uploads/2021/01/STP-Terms-of-Use-Dec-20.pdf) - [Privacy Policy](https://stphub.stpehs.com/wp-content/uploads/2020/12/STP-Privacy-Policy.pdf) - [License Agreement](https://stphub.stpehs.com/wp-content/uploads/2021/01/STP-License-Agreement-Dec-20.pdf) - [Sitemap](http://stpub.com/sitemap) - [Support](http://stpub.com/support) © 2021 STP ComplianceEHS - All rights reserved