Rule 506, crowdfunding

crowd funding word cloudCrowdfunding now comes in multiple flavors:

  • Title II Crowdfunding
  • Title III Crowdfunding
  • Title IV Crowdfunding – Regulation A+
  • Existing Regulation A
  • Rule 504 of Regulation

All have one thing in common: the entrepreneur can use “general solicitation and advertising” to raise money.

But that’s all they have in common. They differ on such critical features as:

  • Who is allowed to invest
  • How much money can be raised
  • Whether Internet portals can be used
  • How much each investor can invest
  • The degree of SEC oversight
  • Whether foreign companies can participate

I’ve created a chart to keep it all straight – a Crowdfunding Cheat Sheet. The chart won’t format properly here in the blog, so you’ll need to click here to view it. You might want to print it for future reference.

crwodfunding treeThis is my takeaway from the chart:

Of the five flavors of Crowdfunding that will soon be available, only Title II Crowdfunding and Regulation A+ Crowdfunding are likely to play a major role. Title III Crowdfunding – ironically, the only thing the media talked about when the JOBS Act was passed in 2012 – seems doomed to a non-speaking part, at least as long as the million limit remains in place. Those satisfied with raising money from only accredited investors will probably look to the simplicity of Title II while those needing to cast a wider net will likely take the plunge into Regulation A+. As for Rule 504 and the old version of Regulation A – they’re history.

But it’s a brand new world in the capital markets, and impossible to predict.

Questions? Contact Mark Roderick.

On January 23, 2014, the SEC issued two Securities Act Rules “compliance and disclosure interpretations” regarding Title II Crowdfunding. Both of the new C&DIs provide transition guidance for Rule 506 offerings that started before September 23, 2013, the effective date of the new Rule 506(c) exemption.

CreateSpace Independent Publishing Platform Crowdfunding on Steroids: General Solicitation under Rule 506(c) (Private Placement Law Series) (Volume 4)
Book (CreateSpace Independent Publishing Platform)

Bitcoin oversupply of Thanksgiving turkeys

by what-to-do-Bitcoining

"The website Assassination Market, a crowdfunding service that lets anyone anonymously contribute Bitcoins towards a bounty on the head of any government official–a kind of Kickstarter for political assassinations. According to Assassination Market’s rules, if someone on its hit list is killed, any hitman who can prove he or she was responsible receives the collected funds.
"Sanjuro’s grisly ambitions go beyond raising the funds to bankroll a few political killings. He believes that if Assassination Market can persist and gain enough users, it will eventually enable the assassinations of enough politicians that no one would dare to hold office

CUSIP Global Services, WealthForge to Collaborate on Crowdfunding  — PR Newswire
NEW YORK, April 30, 2014 /PRNewswire/ -- CUSIP Global Services (CGS), a leading provider of unique security and entity identifiers and descriptive data that enable efficient global trading, and WealthForge, a licensed broker-dealer specializing in ..

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