“Accredited Crowdfunding” Platforms Granted No-Action Relief by the SEC


Ever since Congress enacted the JOBS Act in the spring of 2012, entrepreneurs have been waiting for the U.S. Securities and Exchange Commission to adopt rules that would permit them to raise capital through the use of “crowdfunding.” To date, the SEC has not adopted – or even proposed – rules to make the new crowdfunding exemption a reality. However, in a pair of letters that the SEC issued during the last week in March 2013 to FundersClub, Inc. and AngelList LLC, the SEC granted no-action relief to two Internet-based platforms that seem to permit a form of “crowdfunding” to accredited investors.

Pryor Cashman Corporate Partner Stephen M. Goodman and Of Counsel Michael T. Campoli have authored a legal update analyzing the background and the implications of these no-action letters.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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