In 2012, wanting to assist small businesses and boost job creation, Congress enacted the JOBS Act. Part of the JOBS Act requires the SEC to adopt rules to exempt crowdfunding offerings from registration under the securities laws. Last Wednesday, October 23rd, the SEC issued its long-awaited rule proposal on crowdfunding, bringing it one step closer to fruition.
Crowdfunding means different things to different people. Crowdfunding, crowdsourcing, and general solicitation in private offerings all seem to be mixed up together when people talk about crowdfunding. The SEC’s recent rule proposal may seem confusing because many appear to already be involved in crowdfunding. To clear up any confusion and to help explain the SEC’s rule proposal, the following briefly explains the current state of crowdfunding.
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