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Four years ago, Congress passed the Jumpstart Our Business Startups Act, or JOBS Act, which removed barriers that keep the public from providing capital to startup businesses; equity crowdfunding was about to be legalized. Then, just this May, the SEC's "Regulation Crowdfunding" rules went into effect. Suddenly, every regular Joe and Jane can become an investor in new companies.
It's one of the biggest changes to securities law in decades, and it could result in a lot of small time investors, and small companies, needing your legal guidance.
Democratizing Investing, But Not Necessarily Simplifying It
The new crowdfunding regulations relax the rules regarding how companies can raise capital and who can invest. Under the SEC's rules, companies can raise $1 million a year in equity crowdfunding, through registered broker-dealers and financial portals. Companies that want to take advantage of such crowdfunding have to make a series of disclosures, and everyday investors are limited in how much of their retirement savings they can throw at the next "Uber for groceries."
Of course, since this is security law and the SEC, none of it is entirely straightforward. Which means that enterprising lawyers could find themselves offering crowdfunding legal advice to companies and investors both.
To help you wrap your head around the new regime, Thomson Reuters Legal Solutions recently released "Crowdfunding: A Legal Guide to Investment and Platform Regulation." (Disclosure: Thomson Reuters is FindLaw's parent company.) This guide seeks to provide readers a comprehensive review of the laws, policy, and strategies behind equity crowdfunding.
More Than Just the Legal Basics
It's not just a review of the relevant laws and regulations, though it is that. It's also a look at the opportunities, strategies, and risks of equity crowdfunding. The book tackles three fundamental questions about crowdfunding:
- Is Crowdfunding the best thing to happen to young and growing businesses since the Internet was invented?
- Or is Crowdfunding more like a poorly built firecracker that will blow up in the faces of both investors and businesses?
- If Crowdfunding is both an opportunity and a challenge, how do you end up a winner instead of a loser?
So if crowdfunding investors are banging down your door, or if you want them to be, you could do worse than investing in this text.