The JOBS Act l Equity Crowdfunding Limbo
The Jumpstart Our Business Startups (“JOBS”) Act was signed into law by President Obama on April 5, 2012. The JOBS Act requires the Securities and Exchange Commission (the “SEC”) to issue final regulations regarding the portions of the JOBS Act relating to crowdfunding within 270 days of the law’s enactment on December 31, 2012. As of July 2015, the SEC had not yet issued the JOBS Act’s equity crowdfunding regulations.
While the states are moving forward with their own regulations for intrastate crowdfunding, the future of equity crowdfunding remains in limbo.
The Purpose of Crowdfunding under the JOBS Act
The purpose of the act is to make it easier for small businesses, characterized as “emerging growth companies,” to raise money more cheaply and easily. As useful as all that will be for small issuers, until the SEC promulgates its final regulations, equity crowdfunding in securities offerings remains illegal.
Equity Crowdfunding under the JOBS Act
Even though the equity crowdfunding provisions of the Act have not yet been approved, many companies are being bombarded with solicitations by fraudsters offering to help them raise capital using crowdfunding. As appealing as the crowdfunding provisions of the JOBS Act are for small businesses wishing to go public, and for small issuers who are already public, it’s important for them to be aware that it is not yet available to them as a fundraising tool. They should resist the hype thrown their way by hucksters out to make a quick buck, and wait for the SEC to complete its work on the relevant regulations.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
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