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SEC to Vote Friday on Final Crowdfunding Rules

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The Securities and Exchange Commission will vote Friday on final equity crowdfunding rules under Title III of the Jumpstart Our Business Startups (JOBS) Act, as well as update rules on instrastate crowdfunding.

The Commission will consider whether to adopt rules and forms related to the offer and sale of securities through crowdfunding under Section 4(a)(6) of the Securities Act of 1933, as mandated by Title III of the JOBS Act.

The forthcoming Title III rule is often referred to as “retail crowdfunding” because it will allow nonaccredited investors to invest in offerings of up to $1 million.

The Commission will consider on Friday whether to propose amendments to Securities Act Rule 147 and Rule 504.

SEC Chairwoman Mary Jo White said in June that the agency is looking at ways to allow states to more easily participate in intrastate crowdfunding initiatives.

White noted in June at a meeting of the SEC Investor Advisory Committee that more than 20 states have enacted some form of intrastate crowdfunding legislation or rules, with a number of others considering similar initiatives. 

As states seek to expand the avenues in which issuers may conduct intrastate offerings, she said, “We have focused on the fact that some of our laws and rules were put into place years ago prior to widespread use of the Internet and may present challenges to the states’ efforts.”

For instance, Securities Act Rule 147, adopted in 1974, created a safe harbor that issuers often rely on for intrastate offerings, “and how an issuer might conduct an intrastate offering using the Internet was not contemplated at that time,” White explained. 

The agency’s Division of Corporation Finance, White added, is currently considering ways to improve Rule 147 “by looking at, among other things, the conditions included in the rule for an offering to be considered intrastate.”

Securities Act Rule 504, an exemption that could be used to facilitate regional crowdfunding offerings for up to $1 million that are registered in one or more states, could also benefit from updates, White said at the June meeting.

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