The Jumpstart Our Business Startups Act was signed into law in April 2012 and the Securities and Exchange Commission has been developing regulations ever since to implement the law’s provision that would allow companies to raise capital through equity crowdfunding.
Those regulations still have not been finalized.
In contrast, Georgia, Kansas, Michigan, Alabama and Maine already have laws and regulations that allow crowdfunding within the states. A new law in Washington state awaits the governor’s signature. In Wisconsin, new rules will take effect June 1 and in Indiana, new regulations become official July 1.
A dozen other states are developing crowdfunding regulations. Securities regulators in Texas are ready to announce new crowdfunding regulations, according to local news media. Connecticut has a state-sanctioned study under way.
Two states, New Mexico and Mississippi, have already considered and abandoned crowdfunding legislation.
In fact, while the SEC has sought to locate the delicate balance between making it easier for small companies to raise capital and protecting unaccredited investors, almost half the states in total have moved toward their own intrastate regulations.
“There is a level of frustration out there over the delays by the SEC, and I think the states are simply trying to plug a hole,” said Douglas Ellenoff, a partner with the law firm of Ellenoff Grossman & Schole LLP in New York.
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