Today, I would like to discuss regulatory aspects of crowdfunding. There are several proposals now that aim to change existing regulation to provide small businesses with easier access to capital markets.
One such proposal comes from the Sustainable Economies Law Center (SELC). In July 2010, SELC proposed to the SEC to exempt from registration requirements of Section 5 of the Securities Act securities offerings up to $100,000 in total amount raised with a $100 maximum investment limit per investor. Investors can be only individuals and must be either U.S. citizens or permanent residents. Investors cannot participate in multiple offerings at the same time. Petition is available at www.sec.gov/rules/petitions/2010/petn4-605.pdf.
In my opinion, the SELC proposal is not practical in limiting investment amount to only $100 per investor. A $10,000 limit is much more reasonable, and if lost, would unlikely lead to investor's bankruptcy. Also, the rationale for limiting investors only to one offering at a time is unclear. After all, if they are choosing to participate in risky investments, then they have to be prepared to bear the risks (especially, if the investments are limited to $100).
To read the full, original article click on this link: Legal Aspects of Crowdfunding
Author:Arina Shulga
