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Crowdfunding and the Public/Private Divide in U.S. Securities Regulation
The origination and expansion of crowdfunding as a capital-raising tool has been a hot topic on the street and in the media and the academy for a few years now. In less than ten years, this fusion of social media and traditional corporate finance—a mode of corporate finance through which firms raise investment capital by reaching out over the Internet to a broad, undifferentiated mass of potential investors —grew from a creative impulse to a movement that catalyzed federal legislative action. Its socio-legal bounds are as yet relatively untested. It seems that crowdfunding offers something to nearly everyone.
Annual Meeting of the State Bar of Texas: Business Law Section CLE - Co-sponsored by the Corporate Counsel Section
This is a compilation of the CLE materials from the Annual Meeting of the State Bar as presented by the Business Law Section. Please click on the link to download the materials that are available.
Crowd Funding: New Tools, New Opportunities
This article will set out the fundamental requirements involved in interstate and Texas intrastate equity crowdfunding offerings. It will be important to take another look at the intrastate alternative when practitioners and others comment on the proposed changes to SEC Rule 1474 and the SEC adopts some version of them. Intrastate crowdfunding offerings must also comply with some federal exemption. A streamlined and modernized version of Rule 147 should be helpful in increasing the use and popularity of intrastate crowdfunding.
Crowdfunding from Texas Crowds
The Texas Intrastate Crowdfunding Rules have flexibility that neither the comparable federal statute nor the proposed federal rulemaking have. The Texas rules allow all of the intermediaries operating crowdfunding portals to take compensation. That should encourage the formation of portals and registration with the Texas State Securities Board. In contrast, the definitions and operational limits on both federal Funding Portals and intermediaries in Rule 506(c) offerings exempted under ’34 Act Section 3(h) cannot take compensation. The Texas issuer’s offering exemption provides for a larger ceiling for the investment by each individual investor and has no ceiling on investments by Accredited Investors. In contrast, federal statutory provisions for crowdfunding offerings have ceilings, whether the investors are Accredited Investors or not and all investors must be Accredited Investors in Rule 506(c) offerings made on portals. The Texas rules will likely disqualify fewer issuers than the federal statutory provisions for crowdfunding or the regulatory requirements for Rule 506(c) offerings do. And, the simpler set of disqualifying events or conditions under Texas rules impose a lesser burden in ensuring compliance with the exemption than exists under the federal exemptions.
Crowdfunding from Texas Crowds
The Texas Intrastate Crowdfunding Rules have flexibility that neither the comparable federal statute nor the proposed federal rulemaking have. The Texas rules allow all of the intermediaries operating crowdfunding portals to take compensation. That should encourage the formation of portals and registration with the Texas State Securities Board. In contrast, the definitions and operational limits on both federal Funding Portals and intermediaries in Rule 506(c) offerings exempted under ’34 Act Section 3(h) cannot take compensation. The Texas issuer’s offering exemption provides for a larger ceiling for the investment by each individual investor and has no ceiling on investments by Accredited Investors. In contrast, federal statutory provisions for crowdfunding offerings have ceilings, whether the investors are Accredited Investors or not and all investors must be Accredited Investors in Rule 506(c) offerings made on portals. The Texas rules will likely disqualify fewer issuers than the federal statutory provisions for crowdfunding or the regulatory requirements for Rule 506(c) offerings do. And, the simpler set of disqualifying events or conditions under Texas rules impose a lesser burden in ensuring compliance with the exemption than exists under the federal exemptions.
Fall, 2015
Includes articles the 84th Session of the Texas Legislature, specifically: "2015 Texas Legislative Update on Entity Law" by Daryl Robertson; "A Series LLC Is Now Included Under The Texas UCC’s Definition Of Person, Removing Uncertainty For Secured Lending Transactions" by James Leeland; "Power of Attorney Bill (HB 3095)" by Jacqueline Akins. There were two non-legislative articles as well, including: "Confidentiality of Email – The Changing Consensus" by Ronald Chichester; and "Texas Crowdfunding Portals Provide Texas Businesses New Access to Investment Dollars" by R. Jason Pierce.
Fall, 2015
Includes articles the 84th Session of the Texas Legislature, specifically: "2015 Texas Legislative Update on Entity Law" by Daryl Robertson; "A Series LLC Is Now Included Under The Texas UCC’s Definition Of Person, Removing Uncertainty For Secured Lending Transactions" by James Leeland; "Power of Attorney Bill (HB 3095)" by Jacqueline Akins. There were two non-legislative articles as well, including: "Confidentiality of Email – The Changing Consensus" by Ronald Chichester; and "Texas Crowdfunding Portals Provide Texas Businesses New Access to Investment Dollars" by R. Jason Pierce.