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Article
Publication date: 3 May 2016

Stuart Gelfond and Burcin Eren

To summarize the technical guidelines for complying with the final crowdfunding rules issued by the US Securities and Exchange Commission (“SEC”) after more than three…

451

Abstract

Purpose

To summarize the technical guidelines for complying with the final crowdfunding rules issued by the US Securities and Exchange Commission (“SEC”) after more than three years of consideration pursuant to the Jumpstart Our Business Startups Act (“JOBS Act”) to permit companies to offer and sell securities through crowdfunding.

Design/methodology/approach

Gives an overview of the JOBS Act and the proposed and final crowdfunding rules issued by the SEC; explains how start-ups and other companies can qualify under the final rules; summarizes the disclosure requirements for the issuers; explains the final rules regarding intermediary platforms; and summarizes the proposed rules to facilitate intrastate and regional securities offerings.

Findings

While new crowdfunding rules will enable start-up companies to raise money through the Internet in ways that were previously prohibited, the success of these rules in helping start-ups to raise capital easily and efficiently is still to be seen, as there are still significant restrictions and procedural hurdles for a would-be crowdfunding issuer, which makes crowdfunding costly, especially compared to other forms of capital raising.

Originality/value

Provides an overview and summary of the rules from experienced securities lawyers so that start-up companies and investors would be able to comply with the new rules.

Details

Journal of Investment Compliance, vol. 17 no. 1
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 23 November 2012

Stuart H. Gelfond and Anthony D. Foti

The purpose of this paper is to provide a preliminary explanation of “crowdfunding,” as defined in the Jumpstart Our Business Startups (JOBS) Act, subject to more specific…

1891

Abstract

Purpose

The purpose of this paper is to provide a preliminary explanation of “crowdfunding,” as defined in the Jumpstart Our Business Startups (JOBS) Act, subject to more specific rules that will be issued by the SEC later in 2012.

Design/methodology/approach

The paper provides an introduction to crowdfunding followed by preliminary explanations of the criteria for securities offerings that are exempted from traditional registration, requirements for brokers or funding portals that serve as crowdfunding intermediaries, disclosure and other requirements for the issuing company, the types of companies that would be likely crowdfunding issuers, significant risks and pitfalls potential crowdfunding issuers need to consider, and the potential effects of crowdfunding on a company's prospects for later‐stage funding such as venture capital.

Findings

The success of crowdfunding will likely depend on whether the rules to be defined by the SEC allow for a lean, efficient process for early stage capital raising or a complicated set of rules that makes crowdfunding unappealing or costly to startups and small issuers.

Originality/value

The paper provides practical guidance from experienced financial services lawyers.

Details

Journal of Investment Compliance, vol. 13 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 13 June 2008

Valerie Ford Jacob, Daniel J. Bursky, Stuart H. Gelfond, Michael A. Levitt, Paul D. Tropp and Vasiliki B. Tsaganos

The purpose of this paper is to describe recent amendments to Rule 144 of the Securities Act of 1933 concerning holding periods and resale of privately placed securities.

Abstract

Purpose

The purpose of this paper is to describe recent amendments to Rule 144 of the Securities Act of 1933 concerning holding periods and resale of privately placed securities.

Design/methodology/approach

The paper describes key changes with respect to shortened holding periods, elimination of most requirements for non‐affiliates, and relaxation of requirements for sale of debt securities.

Findings

The paper finds that the SEC has adopted significant amendments to Rule 144 that will increase the liquidity of privately placed securities and ease the burden on issuers caused by having to grant burdensome registration rights. The amendments shorten the holding periods before affiliates and non‐affiliates may sell restricted securities and otherwise loosen restrictions on the public resale of equity and debt securities acquired in private placements.

Originality/value

The paper is a useful guide to rule changes written by experienced securities lawyers.

Details

Journal of Investment Compliance, vol. 9 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

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