What is crowdfunding? What are some of the rules that the SEC has promulgated to regulate crowdfunding?
What will be an ideal response?
Crowdfunding is a method by which entrepreneurs and small businesses can raise small amounts of capital by selling securities to public investors using online portals. With crowdfunding, companies can avoid many of the requirements and expenses associated with traditional issuing of securities.
In SEC Regulation "Crowdfunding" the SEC has set out rules for a crowdfunding offering. Crowdfunding requires that an issuer sells its securities to the public exclusively using an intermediary's internet-based funding portal or web platform. Funding portals must register with the SEC. Crowdfunding allows small companies to raise up to $1,070,000 during a 12-month period from many small-dollar investors. The regulation sets limits on how much money individuals can invest in crowdfunding offerings each year. A "Form C" must be filed electronically with the SEC before fundraising can begin. An issuer can advertise the offering, including using email and social media. Companies that have issued securities using crowdfunding must file an annual report with the SEC and make it available on the company's website.
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What will be an ideal response?
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