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SEC Approves New Crowdfunding Rules
Fulfilling a promise made more than three and a half years ago, on Friday the SEC approved final rules for Regulation Crowdfunding ("Reg CF"), the last remaining component of the JOBS Act of 2012. Reg CF aims to create a nationwide infrastructure for "retail crowdfunding," primarily benefiting:
  • emerging companies and entrepreneurs seeking to raise small amounts of capital from a wide array of investors,
  • accredited and non-accredited investors seeking to fund early stage and growth stage companies, and
  • funding portal operators seeking to connect the issuers and investors over the internet.

Reg CF is expected to go into effect in 2016. The SEC has published a Fact Sheet detailing highlights of the recommended final rules, which can be found here.

Additionally, on Friday the SEC also proposed rules to modernize intrastate securities offerings, such as Minnesota's MNvest system, crowdfunding legislation drafted by Winthrop & Weinstine attorneys Ryan Schildkraut and Zachary Robins and signed into law in the state of Minnesota during the 2015 legislative session. Proposed changes to Securities Act Rule 147 and Rule 504 of Regulation D would eliminate cumbersome advertising constraints and increase the amount of securities that may be sold. The SEC's Fact Sheet on the proposed amendments can be found here. The SEC is seeking public comments to the proposed changes over the next 60 days, and will then determine whether to adopt the proposed rules.

If you intend to utilize crowdfunding for your business, either under the SEC rules or under MNvest, it is wise to begin planning now, to take advantage of opportunities as soon as the rules are enacted.

We will continue to monitor developments to crowdfunding rules; for more information on the proposed changes and how they may affect your business, please feel free to contact us.

About the Authors
Ryan Schildkraut and Zach Robins are business transactions attorneys at Winthrop & Weinstine, and are the co-authors of the MNvest legislation, which legalized securities crowdfunding in Minnesota. They helped organize a group of politicians, business leaders, and other supporters in a grassroots campaign to educate Minnesotans on crowdfunding, and succeeded in MNvest being signed into law on June 15, 2015.
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