On October 23, 2013, the Securities and Exchange Commission issued proposed regulations to implement Title III of the JOBS Act, which will allow for the public sale of securities using crowdfunding under an exemption from registration under securities laws.
Since it has been some time since the regulations were proposed, I won’t attempt to summarize them in this post. There are a number of great summaries of the regulations out there; here are two: (1) Kiran Lingam of SeedInvest’s summary and (2) Kevin Laws of Angelist’s summary. In addition, all 585 pages of the proposed regulations can be found here.
Here are some of my thoughts on the proposed regulations. I have six main points I’ll highlight in this post. I’ve ordered the points from most optimistic/positive to more pessimistic/negative. As you can see there is a lot to like and a lot to dislike.
The comment period on the proposed regulations is open until February 3, 2014. Given their complexity, I would expect we will not have a working crowdfunding exemption in place until late summer of 2014 at the earliest and most likely not until fall 2014.
 However, the SEC did caution that the exemptions could not be used in clearly incompatible ways. For instance, if a company were to engage in a crowdfunding campaign and simultaneously engage in a Rule 506(b) offering, which cannot make use of public advertising, it couldn’t accept investors into the Rule 506(b) offering who were found through the crowdfunding campaign.
Read more articles by Alexander Davie at Strictly Business, a business law blog for entrepreneurs, emerging companies, and the investment management industry.
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