• US$500 and a Click: SEC Proposes “Crowdfunding” Rules for Start-Up Businesses
  • November 11, 2013 | Authors: Chris Austin; Anthony D. Foti; Stuart H. Gelfond; Daniel C. Glazer
  • Law Firm: Fried, Frank, Harris, Shriver & Jacobson LLP - New York Office
  • On October 23, 2013, the U.S. Securities and Exchange Commission (SEC) proposed rules under the Jumpstart Our Business Startups (JOBS) Act to permit companies to offer and sell securities through “crowdfunding.” In a prior memorandum, we discussed the key elements of crowdfunding under the JOBS Act. Crowdfunding describes an evolving method of raising capital that has been used outside of the securities arena to raise funds through the Internet for a multitude of projects. Title III of the JOBS Act created an exemption under the securities laws to permit this type of funding method to be used to offer and sell securities. The JOBS Act also established the foundation for a regulatory structure for this funding method. The goal of the JOBS Act is to make it easier for startups and small businesses to raise funds from a range of potential investors and provide additional investment opportunities for investors.