Booyah! SEC Issues Final Crowdfunding Rules

64Px - 011CrowdfundingAt long last, the SEC has adopted final rules to allow companies to sell securities through equity crowdfunding. If all goes as expected, the rules will go into effect on January 29, 2016.

The highlights:

  •  A company could raise up to $1 million is a 12-month period.
  • Individual investors with annual income or net worth under $100,000 could invest the greater of $2,000 or 5 percent of the lesser of their annual income or net worth.
  • Individual investors with both annual income and net worth over $100,000 could invest 10 percent of the lesser of their annual income or net worth.
  • The maximum amount an investor can acquire over a 12-month period is $100,000.
  • Securities purchased via crowdfunding would need to be held for a year.
  • Funding portals would need to register with the SEC and become a member of a national securities association.
  • Crowdfunding companies must disclose certain information to investors, the SEC, funding portals and other facilitating intermediaries.

I’ll post more after a full review of the final rule.

— Alan N. Walter