After a very slow start, there is momentum at the SEC to enable crowdfunding at the national level. Title II of the JOBS Act, which permits General Solicitation to accredited investors, became law in September.
dd Alejandro Cremades of equity crowdfunding site Rock The Post to the growing chorus of startup mavens concerned about proposed Securities and Exchange Commission rules about how startups raise money.
At a high level, Rep. Patrick McHenry has proposes in his new bill: Raising the aggregate amount is $3,000,000 and allowing adjustment for CPI. Raising the aggregate amount to $5,000,000 If the issuer provides potential investors with audited financial statements. Individual investor can provide greater of $5000, 10% of annual income or 10% of net worth Regarding reporting requirements, a startup can rely on a financial statement certified by principal executive officer if raising amounts less than $500,000. Financial statements must be reviewed by a public account if raising funds between $500,000 and less than $ 3 Million. Regarding verification of investor, an intermediary may rely on a certification by an investor as to the investor’s status as an accredited investor and, regarding an unaccredited investor, the investor’s annual income, network, and the aggregate amount of securities sold to the investor in reliance on the exemptions provided under Title III. Other terms: An intermediary does not need to be registered as a broker. An Intermediary may select transactions. An intermediary may terminate transactions.
Small businesses raising money by selling shares over the Internet wouldn’t have to verify that their backers comply with individual investment limits under a U.S. regulatory proposal set for a vote as soon as next week.