Securities and Exchange Commission has approved a proposed amendment

Seal of the U.S. Securities and Exchange Commi...
Seal of the U.S. Securities and Exchange Commission. (Photo credit: Wikipedia)

 

NEW YORK, Oct 17 (Reuters) – The U.S. Securities and Exchange Commission has approved a proposed amendment from Wall Street’s industry-funded regulator that helps investment banks use a new U.S law aimed at easing the way for small companies to go public.

 

Six months after the JOBS (Jumpstart Our Business Startups) Act was passed amid much fanfare as a way to help companies raise money in public markets, banks have not embraced some key provisions, which allow analysts to join bankers on pitches to investors, and publish research reports before a company goes public.

 

The new amendment from the Financial Industry Regulatory Authority, effective immediately, eases the restrictions somewhat by aligning rules of the financial watchdog with those of the JOBS Act. The SEC approved the amendment on Oct. 11.

 

The rule change removes the previous 40-day quiet period after an initial public offering so underwriters can publish research. The change would also allow analysts and bankers to attend IPO pitch meetings or “bakeoffs” together, as long as the analysts don’t solicit business.

 

However, the FINRA change involving communication between analysts and their investment banking colleagues does not apply to Wall Street’s largest banks, bound by a separate regulation, the Global Research Settlement.

 

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Forbes Article On Crowdfunding Explosion in 2013

Read this article on Forbes today. Very well written and accurate:

The world of entrepreneurial finance is changing rapidly; we are at a tipping point that will make what seems like a vibrant part of our global economy today seem small in one year’s hindsight.

Whether you are a service provider, social entrepreneur, angel investor, venture capitalist, or one of the millions of people ready to become a small-scale start up financier, it is time to pay attention.

Estimates for annual crowdfunding transactions go as high as $500 billion annually compared to 2011’s $1.5 billion (anticipated to be $3 billion in 2012).  If crowdfunding even begins to approach that scale, it will completely change the landscape for start-up financing.

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A Comparative Look at Kickstarter, Indiegogo and Razoo

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Buzzwords and catchphrases evolve when there is some cool opportunity for success. People get excited, and sometimes we realize that “easy” success actually only works in very specific circumstances. One of today’s buzzwords is crowdfunding.

First, some definitions. This isn’t crowdsourcing, which is another popular buzzword. Crowdsourcing is creating something by dispersing the task of creating it to many people. It’s possible to crowdsource writing a book, for example. However, when people fund the work of a single editor who turns that crowdsourced content into a coherent narrative, that is crowdfunding. Crowdfunding is not the same thing as fundraising for ongoing operating support. Building a base of small donors and trying to get large amounts of money is an important, ongoing operational goal, but that’s just fundraising. There may be some new tools to do it, but it is as old as the nonprofit sector itself.

The closest parallel to the 20th century nonprofit world would probably be the capital campaign. Here, nonprofits would make requests for large goals on a fixed timeline, often to buy a fixed asset like a building. The old-style capital campaign has taken a beating in the post-2007 economy, as the primary way this was done relied on large-scale donations from small numbers of well-off individuals and institutions. Many of these took large portfolio hits five years ago and aren’t recovered to the point where they will make big investments again.

In contrast, crowdfunding takes the small-donor base and adds the one-time effort emphasis for specific, defined purposes. This is only practical if the cost of reaching donors is practically nil (there are typically no in-person visits from the president with a $10 glossy for your capital campaign in crowdfunding), and if you can reach a lot of them. If your nonprofit is going to reach a large enough base, you’ll probably need to rent some infrastructure. The big players are Kickstarter, Indiegogo and Razoo.

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CROWDFUNDING FROM A TO Z WHITEPAPER by Laura Anthony Esq

As the expected deadline for the SEC to publish rules and regulations enacting the Crowdfunding Act (Title III of the Jumpstart Our Business Startups Act (JOBS Act)) grows nearer, it is a good time for a complete overview of crowdfunding.  New Sections 4(6) and 4A of the Securities Act of 1933 codify the crowdfunding exemption and its various requirements as to Issuers and intermediaries.  The SEC is in the process of drafting the underlying rules and regulations which will implement these new statutory provisions.

A. WHAT IS CROWDFUNDING?

The Crowdfunding Act amends Section 4 of the Securities Act of 1933 (the Securities Act) to create a new exemption to the registration requirements of Section 5 of the Securities Act.  The new exemption allows Issuers to solicit “crowds” to sell up to $1 million in securities as long as no individual investment exceeds certain threshold amounts.

The threshold amount sold to any single investor cannot exceed (a) the greater of $2,000 or 5% of the annual income or net worth of such investor, if the investor’s annual income or net worth is less than $100,000; and (b) 10% of the annual income or net worth of such investor, not to exceed a maximum $100,000, if the investor’s annual income or net worth is more than $100,000.  When determining requirements based on net worth, an individual’s primary residence must be excluded from the calculation.  Clearly there is a conflict in the language determining threshold amounts.  An investor could fall within both categories.  The conflict has been pointed out in numerous letters to the SEC and will presumably be addressed in the rule making.

In addition, Section 302 of the Crowdfunding Act requires that all crowdfunding offerings be conducted through an intermediary that is a broker dealer or funding portal that is registered with the SEC and a member of a registered self-regulatory organization (SRO).  Currently that SRO is Financial Industry Regulatory Authority (FINRA).

 

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World Crowdfund Federation Launches Across Five Continents

 

WASHINGTON and TORONTO, Oct. 4, 2012 /PRNewswire-USNewswire/ — Today crowdfunding associations in the United States, Canada, Nigeria, Australia, Israel, India and Brazil announced the formation of the World Crowdfund Federation (WCF).  “We are very excited about this new development,” said David Marlett, Founder and Executive Director of the United States’ National Crowdfunding Association (NLCFA), adding, “We see many other countries soon to join, including the Scandinavian countries and Germany and the UK.”

(Logo: http://photos.prnewswire.com/prnh/20121004/DC86856LOGO )

The NLCFA and a group of supporting crowdfunding associations around the world originated the concept of the WCF.  “Once David lit the fuse, it just took off,” said Craig Asano, Executive Director of the National Crowdfunding Association of Canada (NCFA Canada).  “We are all not-for-profit organizations that promote crowdfunding in our respective countries.  Through the WCF we will share resources and information, and provide mutual support to each other around the globe.”

Though donation and reward-based crowdfunding is what has proliferated the globe in the past couple of years, it is the prospect of investment or equity crowdfunding that is all the buzz.   Investment crowdfunding is already legal in Australia, Sweden, the UK, and other countries, and with the United States’ JOBS Act it will be legal in the US in mid-2013.  “Crowdfunding initiatives and industries are popping up around the world at remarkable speeds,” said Baruch Levanon, Executive Director of the Israel Crowdfund Association.   “We find increasing awareness to the potential of the crowdfunding mechanism among the financing and business community in Israel as well.”

“Crowdfunding transcends all geographic and political boundaries.”

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Adult Content Crowdfunding Platform – www.adultxfund.com

Do you need an adult content friendly crowdfunding platform? Well a new site at http://www.adultxfund.com/ has just gone live and is specializing in adult initiatives and is backed by GrowVC:

AdultXfund is a place where companies can offer equity for investment in their adult business and projects – a network that’s dedicated to adult industry entrepreneurs and investors, bringing sexing and interesting projects to new partners, and to helping its members realise their full potential.

Backed by Grow VC, entrepreneurs and funders can have the confidence that the tools and support teams are in place to make sure that everything is secure and reliable.

I know there are or will be others and I will report on them just as I do the non-adult platforms and I fully expect that other niche markets will be seeing their own platforms pop up as the crowdfunding platform market reaches saturation point.