Crowd Funding Platforms Avoid BD Registration

The Securities and Exchange Commission's Division of Trading and Markets assured two entities that, if they sought accredited investors for start-up companies they would not risk enforcement action by failing to register as broker-dealers under the Securities Exchange Act of 1934 Section 15(a)(1).  See FundersClub Inc. SEC No-Action Response, avail. 3/26/13.

In granting registration relief, the staff recognized the entities' representations that:

• the entities are advisers to venture capital funds;
• The services include exercising any rights negotiated with the start-up company, providing the start-up with advice and networking assistance, voting investment fund shares, offering or selling its securities in the startup; deciding on any tender offers, and winding up the investment funds;