On June 8, 2017, the House of Representatives passed the Financial CHOICE Act of 2017 on a vote of 233-186. Congress loves acronyms, and here “CHOICE” stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs. Although the thrust of the bill is focused on repeal or modification of significant portions of the Dodd-Frank
Crowdfunding
The JOBS Act at Five: Congressional Hearing Highlights Need for Further Reform
On March 22, the Subcommittee on Capital Markets, Securities, and Investment of the Financial Services Committee conducted a hearing entitled “The JOBS Act at Five: Examining Its Impact and Ensuring the Competitiveness of the U.S. Capital Markets”, focusing on the impact of the JOBS Act on the U.S. capital markets and its effect on capital…
House Passes Watered Down “Fix Crowdfunding Act”
On July 5, the House of Representatives passed a watered down version of the Fix Crowdfunding Act (the “FCA”) that was initially introduced in March. The bill seeks to amend Title III of the JOBS Act by expressly permitting “crowdfunding vehicles” and broadening the SEC registration exclusion, but leaves out three important reforms that were…
Title III Crowdfunding Goes Live Today with Much Potential, but Different Reality
Ever since the Federal securities laws were enacted in 1933, all offers and sales of securities in the United States had to either be registered with the SEC or satisfy an exemption from registration. The commonly used private offering exemption, however, prohibited any act of general solicitation. The JOBS Act of 2012 created a new…
Fix Crowdfunding Act Would Cure Title III Crowdfunding Ills
Beginning on May 16, issuers for the first time will be able to offer and sell securities online to anyone, not just accredited investors, without registering with the SEC. The potential here is breathtaking. Some $30 trillion dollars are said to be stashed away in long-term investment accounts of non-accredited investors; if only 1% of…
Working the Crowd: A Primer for Funding Portals
One of the key investor protections of Regulation Crowdfunding under JOBS Act Title III is the requirement that offerings must be conducted exclusively through a single platform operated by a registered broker-dealer or a new type of SEC registrant, a funding portal. Although SEC registration for funding portals began January 29, 2016, intermediaries (funding portals …
Regulation Crowdfunding Effective Date is May 16, 2016
It’s official: the new Regulation Crowdfunding rules will become effective on May 16, 2016. The SEC’s final rules release of October 31, 2015 provided that, with certain exceptions, the new rules will go into effect 180 days after they are published in the Federal Register. We just learned that the rules were published in…
Trick or Treat? SEC Adopts Controversial Crowdfunding Rules
At an open meeting on October 30, 2015, the Securities and Exchange Commission by a three-to-one vote adopted final rules for equity crowdfunding under Section 4(a)(6) of the Securities Act of 1933, as mandated by Title III of the Jumpstart Our Business Startups Act. The final rules and forms are effective 180 days after publication…
“It’s Complicated”: Establishing “Preexisting Relationships” with Prospective Investors
In my last post, I blogged about online funding platforms. In that post, I described the typical model of indirect investing through a special purpose vehicle (“SPV”) with the platform sponsor taking a carried interest in the SPV’s profits from the portfolio company and no transaction fee, as a means of avoiding broker-dealer regulation.…
What’s the Deal with Online Funding Platforms?
Lately I’ve been approached by current and prospective clients about online funding platforms, either by folks interested in forming and operating them or those interested in raising capital through them. There seems to be a lot of confusion surrounding how they work and what the legal issues are, so here’s my attempt to bring some…