SEC Approves Equity Crowdfunding

[g5000]

SEC moves toward allowing crowdfunding stock offerings

The Securities and Exchange Commission voted unanimously to propose rules that, for the first time, would allow investors to buy stock in companies over the Internet using a crowdfunding exchange. These rules could reinvent the way that companies raise money by allowing them to bypass the traditional costs of going public, which usually involved hiring costly investment bankers and accountants.

Woo hoo!

With the new rules, the SEC is looking to open the concept of crowdfunding to the public, while still offering investor protection. The new elements of the rules would cap any company's ability to raise money through crowdfunding to $1 million every 12 months. Investors on the other hand would only be permitted to invest the greater of $2,000 or 5% of their annual income or net worth every 12 months, as long as their net income or annual income is less than $100,000. For investors with net income or annual income of $100,000 or more, investors would be able to invest 10% of that amount every twelve month period in crowdfunding opportunities. Securities bought through portals would have to be held a year before sold.

The companies selling stock through portals would also face restrictions. Companies would have to disclose details on any investors or officers owning 20% or more of the company. Financial statements of the company's operating history plus a tax return, not to mention details about certain financial dealings between officers and outside companies would need to be disclosed.

Even after the SEC vote, equity crowdfunding doesn't become a reality. There will be a 90-day period for the public to issue comments. The SEC will then review those comments and make a final determination.

Caveat emptor.

"Though expected it was a poor decision by the SEC. Unfortunately by approving crowd funding for unaccredited investors under the Jobs Act, it will turn "salami" scams, where small amounts are defrauded from investors, into the new normal," says Andrew Stoltmann of Stoltmann Law Offices. "This is not a good day for financially unsophisticated investors who will be targeted unrelentingly by stock promoters."

Yep. Bucket shops.

 

[iamwhatiseem]

A little extraction here...a little extraction there...just gets easier everyday...

 

[KokomoJojo]

A little extraction here...a little extraction there...just gets easier everyday...

government taught them well.

 

[Moonglow]

Sucker born every day to a stock broker.

 

[Imran520]

Equity funding is important for stock market. So, it is better that SEC approved it.