Whitepaper: What You Need to Know About the JOBS Act and Equity Crowdfunding
Washington, DC – September 20, 2012 – Equity crowdfunding will offer small businesses a new tool to raise capital once the Security and Exchange Commission (SEC) and self-regulatory groups formulate rules for such investing under the new Jumpstart Our Business Startups Act. Beforehand, the “crowd” could offer donations to projects online, but unregistered offers for equity through crowdfunding portals would have violated Section 5 of the federal Securities Act.
Crowdfunding and the JOBS Act
The JOBS Act, signed into law on April 5, 2012, will enable small businesses to raise up to $ 1 Million per year from small investors through online, crowdfund investing portals. The JOBS Act requires the SEC to formulate rules to regulate such crowdfund investing. Sarah Hanks, CEO of CrowdCheck, Inc. and a CFIRA member, has published a whitepaper through Bloomberg BNA’s Securities Regulation & Law Report that sheds some light on the legislative and regulatory process of crowdfund investing. Portions of the article may be reviewed below. Please note this article is reproduced with permission from Securities Regulation and Law Report, 44 SSLR 1710, 09/17/2002, Copyright 2012 by The Bureau of National Affairs, Inc.