Crowdfunding & Unregistered Offerings
Following the passage of the Jumpstart Our Business Startups (JOBS Act) by Congress in 2012, companies, entrepreneurs and investors have all pursued strategies to take advantage of the changes to the federal securities laws offered by the JOBS Act. Application has been slow because the Securities and Exchange Commission has issued implementing rules very slowly. However, once the SEC issued final rules for advertised offerings under Regulation D, businesses of all sizes started to explore opportunities to find investors or investment opportunities through web portal. Then, beginning in 2014 with the first law authorizing intrastate crowdfunding under state securities laws, the mix of laws governing and permitting capital raising became even more complex.
Although crowdfunding has a number of meanings, generally, under securities laws it refers to methods of soliciting investors through internet portals with an offering cap typically under $2,000,000. Crowdfunding offerings are small, when compared with most offerings, but have garnered attention from serial entrepreneurs, real estate developers and experienced broker dealer organizations. Clark Hill attorneys counsel businesses and investors regarding legal compliance for comprehensive capital raising strategies, which today may include crowdfunding activities. Clark Hill attorneys are active in states with recently adopted intrastate crowdfunding laws, and have provided educational presentations on crowdfunding in several of those jurisdictions.