In November, the U.S. House of Represantatives passed the Entrepreneur Access to Capital Act, HR 2930, to create a new exemption under the Securities Act of 1933 for “crowdfunding” meeting specified conditions. About the same time, the U.S. Senate weighed in with the Democratizing Access to Capital Act of 2011, S 1791. According to the bill’s author, Massachusetts Senator Scott Brown, S 1791 “would allow small companies to offer shares of stock directly to ordinary investors through established and vetted peer-to-peer platforms.”

It is important to note that neither of these bills has been enacted and it remains to be seen what Congress will do, if anything, to facilitate crowdfunding. Unless and until action is taken at the state or federal level to facilitate crowdfunding, it will remain a risky proposition, as illustrated by this Consent Order to Desist and Refrain that was recently issued here in California.