As almost everyone knows who has been tracking federal regulation of equity crowdfunding since the passage of the JOBS Act, the Securities and Exchange Commission has at long last approved the final rules for what they have called "Regulation Crowdfunding." The actual document describing the commission's findings and the text of the new rules clocks in at 686 pages. Even though the SEC has been considering these rules for more than three years, the decision was not unanimous. Tensions continue between those who believe the rules need to emphasize investor protection and those who fear that the rules create burdensome obstacles that may defeat the purpose of crowd-sourced financing. One SEC commissioner acknowledged that the new law is an "experiment."
The view from 30,000 feet is that the new rules will permit private companies to raise up to $1 million over a twelve-month period. Potential investors will be subject to caps on how much they can invest. Internet portals will be the medium of exchange for the new securities offerings. This brave new world is replete with all of the opportunities and dangers that new worlds offer, and the VLD is ready to explore.
The rules will become effective 180 days after they have been published in the Federal Register, so over the coming weeks and months, the VLD will take a look at specific parts of the new rules and consider what they mean for entrepreneurs and companies at ground level. Look for a series of posts under the moniker "Countdown to Crowdfunding." Ready or not, it's coming. Let's take a page from the scouting handbook and "be prepared."
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