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SEC issues final rule on crowdfunding

  • SEC (US Securities and Exchange Commission) Image

Oct 30, 2015

On October 30, 2015, the Securities Exchange Commission (SEC) issued a final rule, "Regulation Crowdfunding," which would permit eligible companies to use “crowdfunding” to offer and sell securities. Crowdfunding is a method of raising capital through the Internet, typically by soliciting small individual contributions from a large number of people.

The final rule (mandated by Title III of the JOBS Act) permits an individual to use crowdfunding to invest in eligible companies, subject to certain thresholds, on the basis of the annual income or net worth of the individual; however, the amount of money a company can raise through crowdfunding offerings would be limited to $1 million in a 12-month period. The final rule will become effective 180 days after the date of its publication in the Federal Register.

For more information, see the press release on the SEC’s Web site.

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