Saturday, February 6, 2016

Time for the States to Step up on Crowdfunding or Become Irrelevant

Jim Verdonik has a new post on his blog discussing the implications of the recent new SEC rules on investment crowdfunding, and the importance of their proposed regulatory changes that will impact state based investment crowdfunding exemptions like the NC PACES Act. In the intro to the blog post, Jim says:

"On October 30, 2015, the Securities and Exchange Commission issued final rules for Federal Crowdfunding offerings under Section 4 (a) (6) of the 1933 Act, which will become effective in May 2016 ("Section 4(a)(6) Federal Crowdfunding Rules").
Jim Verdonik
Although the Section 4(a)(6) Federal Crowdfunding Rules were long awaited, the changes to SEC Rules 147 and 504 that the SEC proposed the same day to make it easier for more businesses to rely on Rules 147 or 504 to do State crowdfunding offerings may have a bigger positive impact on capital-raising than the Section 4(a)(6) Federal Crowdfunding Rules.
The proposed changes to Rule 147 and Rule 504 are important, because the Section 4(a)(6) Federal Crowdfunding Rules combine a low $1 million maximum offering amount with many expenses and restrictions on both issuers raising capital and platform operators.  The combination of restrictions with a low annual maximum offering amount make it likely that the Section 4(a)(6) Federal Crowdfunding Rules will not be a cost inefficient alternative for most businesses or platform operators. "
For the full post and analysis, visit Jim's blog at:
http://jimverdonikintersection.blogspot.com/2016/02/time-for-states-to-step-up-on.html

Jim Verdonik is an attorney with Ward and Smith, P.A. in Raleigh.  He can be reached at jfv@wardandsmith.com. Jim's newest book is a very valuable handbook for entrepreneurs, attorneys, investors, and crowdfunding industry professionals called Crowdfunding Opportunities and Challenges.



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