• In April of 2012 the US enacted The JOBS Act, which contained provisions intended to expand private capital formation in the US, both in terms of issuer access to capital as well as the individual investor participation in private offerings.   The new law enables the use of public advertising through the internet and other media channels to communicate information relate to a private placement offerings.


  • “Crowdfunding” offerings fall into one of two offering approaches: 1)  Rule 506(c), in which investment may only be made by third-party verified Accredited Investors, as defined in Rule 501 of SEC Regulation D, and where an unlimited amount of funds can be raised in the offering, and 2) via a FINRA-approved “Crowdfunding Portal”  to individual investors whose financial resources are not as great as is required to be an Accredited Investor, but where the offering amount is limited to $1,000,000. 


  • The JOBS Act tasked the SEC, and by extension, FINRA, the self-regulatory authority for securities broker-dealers, to develop regulations to guide participants in these new forms of private placements.  


  • Under Rule 506(c), the SEC must receive the offering documents as least 15 days before the solicitation is to occur (an “Advanced Form D” Filing) and also notification within 15 days of the first purchase by an investor (a “Form D” Filing).  Not making each filing within the prescribed deadlines could result in a prohibition of the Issuers access to the Regulation D market for 1 year.


  • Crowdfunding private offerings can include any form of security, such as promissory notes or equity interests (eg. common stock, preferred stock or membership interest in a Limited Liability Company).


  • Private placements are subject to all federal and state regulations regarding misrepresentation or fraud.