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ARTICLE · 15 JULY 2013

Crowdfunding: Caveat Emptor?

Morrison Foerster
Morrison Foerster
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Morrison Foerster

Morrison Foerster

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How different are the markets for crowdfunding—an emergent online platform for raising small sums from multiple investors—in the U.S. and the U.K?

United StatesCorporate/Commercial Law

How different are the markets for crowdfunding—an emergent online platform for raising small sums from multiple investors—in the U.S. and the U.K? "While Title III of the JOBS Act would establish an SEC exemption for crowdfunding, the SEC has yet to propose or adopt implementing rules," says Washington, D.C.-based Morrison & Foerster partner David Lynn. "Absent registration with the SEC, equity crowdfunding online is likely illegal, absent the availability of an existing exemption."

"There is an expectation that raising capital online will prove less costly and may provide more funding sources than traditional methods," adds Morrison & Foerster partner Lawrence Bard. "Yet burdensome reporting requirements may prove complicated and costly, making crowdfunding's viability largely dependent on the amount charged by intermediaries."

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