SEC Adopts Final Rules For Securities-Based Crowdfunding

On October 30, 2015, the Securities and Exchange Commission (SEC) adopted long-awaited final rules that will allow for the offer and sale of securities through online crowdfunding (known as "Regulation Crowdfunding"). The adoption of crowdfunding rules completes the last major rulemaking mandate for the SEC under the JOBS Act. When the rules become effective, companies will be able to raise up to $1 million in any 12-month period through online crowdfunding portals. The new crowdfunding rules will be effective 180 days after they are published in the Federal Register, which has not occurred as of the publication of this alert.

SECURITIES-BASED CROWDFUNDING

Non-securities-based forms of crowdfunding have been around for a while. Many start-up companies have used donation-based crowdfunding to raise capital for a variety of business ideas. However, people giving money in these crowdfunding events have been unable to reap a return on the money invested and usually