SEC Proposes Rules For Crowd Funding Registration Exemption

The U.S. Securities and Exchange Commission (SEC) has released long-awaited proposed rules under the crowd funding provisions of the Jumpstart Our Business Startups Act of 2012 (JOBS Act). The JOBS Act crowd funding provisions provide an exemption from registration for securities offerings under certain conditions. The recent proposed rules are not final, and the SEC is accepting comments on the proposed rules until 3 February 2014.
 
Issuers that are organized outside of the U.S. or that are already subject to periodic SEC reporting requirements may not rely on the crowd funding registration exemption.

The JOBS Act's crowd funding provisions are intended to give smaller issuers easier access to capital by lowering regulatory barriers to investment. However critics have noted that the SEC's proposed rules contain significant restrictions that, if adopted, would impose substantial compliance obligations on issuers and the online portals that act as intermediaries