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Schmidt and Brown Provide Insight on New SEC Crowdfunding Rules
On January 27, Drea Schmidt and Claire Brown provided an overview on the long-awaited SEC crowdfunding rules at a monthly meeting held by Tonkon Torp’s Corporate Finance Practice Group. Drea and Claire explained the new rules and how they differ from the proposed rules, and evaluated the utility of crowdfunding as a capital-raising alternative.
In October 2015, the SEC concluded a two-year rulemaking process by adopting final rules to permit companies to offer and sell securities through equity crowdfunding. The new rules create an exemption from the Securities Act to permit companies to raise capital through the Internet subject to limits on the amount issuers can raise. It also permits individuals to invest in crowdfunding offerings by purchasing securities, subject to limits, and creates a regulatory framework for funding portals to facilitate crowdfunding transactions. The final rules become effective May 16, 2016.
Drea and Claire are members of the firm’s Corporate Finance and Entrepreneurial Services practice groups. They practice in the areas of securities, corporate governance, corporate finance, mergers and acquisitions, and general corporate matters. Drea and Claire counsel a variety of business clients, including small businesses and startups, on various business and fundraising matters