U.S. Securities-Based Crowdfunding

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Acting Chair Piwowar made remarks at the the Dialogue on Crowdfunding hosted by the Securities and Exchange Commission and the Salomon Center for the Study of Financial Institutions at New York University.  In his remarks, Acting Chair Piwowar shared the following statistics regarding crowdfunding, noting that:  163 U.S. securities-based crowdfunding deals have been initiated, of which 33 have completed their fundraising.  Over $10 million has been raised since the regulation went into effect, with most offerings still ongoing.  There are currently 21 registered funding portals in the United States.  He also expressed concern as to whether the final rules are too restrictive or too burdensome and raised the possibility that the Commission consider steps to improve the regulations, including through the use of the Commission’s exemptive authority.

Commissioner Stein closed the session by noting some challenges.  Stein addressed the role of funding portals, noting that from May 2016 to January 2017, 27 crowdfunded offerings were withdrawn and of these 16 were hosted by the funding portal that was recently expelled by FINRA.  Along these lines, Commissioner Stein suggested revisiting the role of funding portals as gatekeepers for these transactions.  Stein also commented on the types of securities offered to date in crowdfunded offerings, which were predominantly equity (36%) and 26% of which were for SAFE securities.  She raised the possibility that the Commission should review whether SAFE securities are appropriate for retail investors.  Stein also noted concentration with the top five federal crowdfunding states accounting for 60% of offerings and over 90% of the total amount raised from completed offerings. The location of registered portals is heavily concentrated in California, Texas, and along the East Coast.

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