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The SEC Crowdfunding Proposed Regulations: Process Overview

In his recent blog posting, my colleague, John Mashni, noted that on October 23, 2013, the SEC issued a release containing the long awaited proposed crowdfunding regulations.

The SEC release is 568 pages long with an additional 17 page exhibit. Reviewing the release is not for the faint of heart!

We will share some of the highlights from the release and proposed regulations in bite sized pieces over a period of several weeks. We hope this will make the information easier for you to digest.

First, a word about the process. The SEC release may currently be found on the SEC’s website. Soon, it will be published in the Federal Register. The comment period will be open for 90 days after the date of publication in the Federal Register. It is not unusual for the SEC to extend comment periods on proposed regulations that have a great deal of public interest. That could happen here.

As is the SEC’s practice, for each of the many issues addressed in the proposed regulations, the SEC discusses the issue and the SEC’s rationale for how it proposes to address the issue. Each discussion topic is followed by numerous questions about which the SEC is seeking comments, aimed at helping the SEC evaluate whether its initial proposal should be retained or be modified. If you would like to provide comments, the SEC has an easy to use internet comment form posted on its website.

As a reminder, the point of the crowdfunding regulations is to create a vehicle for new and small enterprises to raise modest amounts of capital without having to register with the SEC using the existing registration and reporting structures. The existing structures are prohibitively complex and expensive to use for small capital raises.

Our first topics for discussion will address requirements imposed on the issuer (the company raising the money). After that, we will address the requirements imposed on the intermediaries who host the crowdfunding websites. Stay tuned to this blog for the next post regarding the proposed crowdfunding regulations.

Please contact Iris Linder (517-371-8127 or ilinder@fosterswift.com) for more information.

Categories: Crowdfunding, Venture Capital/Funding

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