I think the SEC has done a terrific job with Crowdfunding, all things considered. In its latest contribution, the SEC just told issuers how to navigate a bumpy stretch of highway in intrastate Crowdfunding.
The bumps start with Federal Rule 147, written long before the Internet was a glimmer in Al Gore’s eye. Among other things, Rule 147 provides that an intrastate offering must be offered only to residents of a single state. That rule makes sense in a paper-only world, but how to comply when an offering is on the Internet, visible to everyone with a browser?
To get past the bumps, the SEC drilled down on the technology and realized that a user’s IP address reveals the state where his or her computer is located. Taking the logical step, the SEC confirms that as long as the offering can be viewed only by users with in-state IP addresses, it satisfies that piece of Rule 147.
I’d like to say the SEC got that idea from my blog, but I’m sure that’s not true.
From the 2013 no-action letters to the flexible regulations under Rule 506(c) to the proposed regulations under Regulation A+, the SEC has shown that it “gets” Crowdfunding. Now, if Congress would just give us a workable Title III. . . .
Questions? Let me know.
Mark, At my request, the SEC is reconsidering its position on this issue in view of new information I presented to them, some of it public (ala the only SEC authority on the subject, a 15 year old SEC No Action Letter which conflicts with the recent CDI, and private outcry by at least one state securities administrator.
As to the wonderful solution of the SEC in October, technology costs small, local businesses money. And I have yet to see software capable of distinguishing between a principal residence and a secondary residence, something firmly embedded in the now not so safe harbor of Rule 147.
Just my opinion. Hope the SEC will soon follow suit.
Best,
Sam Guzik