Crowdfunding

• Compliance and Disclosure Interpretation (C&DI), Regulation Crowdfunding; and
• Small Entity Compliance Guide on Regulation Crowdfunding.

• Requirements of Regulation Crowdfunding;
• Issuer disclosure;
• Limits on advertising and promoters; and
• Restrictions on resales.

Staff Speech, New Ways for the Financing of Small and Medium Enterprises and the Challenges of Crowdfunding by Mary Jo White, SEC Chair

• There is significant interest and excitement in the U.S. about the use of securities-based crowdfunding, which will hopefully give small businesses another tool for raising capital and building vibrant markets. Companies have many options for raising money to fund their businesses, and those seeking capital will ultimately be in the best position to decide whether crowdfunding or another capital-raising option will work best for them.
• Importantly, in implementing the SEC's statutory crowdfunding mandate, the rules issued seek to maintain strong investor protections, while also streamlining capital formation for smaller issuers. There are also specific initial and ongoing disclosure requirements regarding the business and the securities offering and requirements for financial statements.

• The SEC has completed all of its other statutory requirements from the JOBS Act to promote capital-raising. In 2013, the SEC created a new exemption that allows companies to engage in general solicitation of the public for certain unregistered securities offerings, provided that all purchasers are "accredited investors" and that issuers take reasonable steps to verify that status. Historically, general solicitation had not been permitted in these types of private offerings. The SEC has implemented statutory enhancements to the registration and reporting process for initial public offerings of common equity securities. These enhancements are known as the "IPO on-ramp."

• About 85% of the companies doing IPOs since the JOBS Act was enacted have chosen to start as an emerging growth company. Nearly 1,000 emerging growth companies have taken advantage of the ability to confidentially submit draft registration statements for their IPOs.

• The SEC has also been working to improve capital formation for smaller companies through the SEC staff's Disclosure Effectiveness Initiative. As part of this initiative, the SEC staff is reviewing the SEC's key disclosure requirements, and is considering ways to improve the disclosure regime for the benefit of both companies and investors.

• As part of the Disclosure Effectiveness Initiative, the SEC staff is considering how our rules can be improved for smaller companies. Just last month, the SEC issued a "concept release" in which it considered and sought comment on aspects of our scaled disclosure system for smaller reporting companies. The scaled disclosure system provides accommodations to smaller reporting companies with regard to certain disclosure requirements, as compared to the requirements applicable to their larger counterparts. The SEC looks forward to comments on this concept release to help inform any potential further consideration of changes to the scaled disclosure system.