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Polsinelli - Labor and Employment

December 2013


Update: SEC Releases Long-Awaited Proposed Crowdfunding Rules


For more information about this e-Alert, please contact the contributing authors:


Evan M. Gilbert




Peter F. Waltz




William M. Schutte




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On October 23, 2013, the SEC voted unanimously to publish for public comment rules that would permit startups and small businesses to publicly raise capital by offering and selling unregistered securities through crowdfunding. The proposed crowdfunding rules represent a significant shift in how companies are permitted to raise capital. The cost of complying with current federal and state securities laws has effectively made the use of crowdfunding unavailable to start-ups and small business when seeking investors.

The proposed rules are intended to provide certain companies with greater access to capital by creating an exemption from registration for securities offered and sold through crowdfunding. The new crowdfunding exemption would allow these companies to raise capital from an unlimited number of investors without registering the offering with the SEC or any state. In addition, the proposed rules provide a framework for regulation of on-line intermediaries that issuers must use when conducting crowdfunding exempt offerings, including a new type of authorized intermediary known as a "funding portal." Under the proposed rules, a funding portal will be exempt from broker-dealer registration and will have less demanding licensing and oversight standards compared to those of a registered broker-dealer. To read more about the SEC's proposed amendments, please click here.

To learn more about the SEC's proposed crowdfunding exemption rules and how your business may take advantage of these proposed rules or existing federal and state exemptions, please contact a member of Polsinelli' s Corporate Finance and Securities practice group.

To read the full alert, click here.



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