It's no secret that the European financial markets and economies have been hit particularly hard by the financial crisis and recession. It has been discussed and analyzed every day in every form of media, yet many of the problems remain unresolved. Progress has been difficult to make, both at a European and a national level, as regulators search for solutions. We believe crowdfunding, with its potential for increased capital flows and the resulting job creation, can be a part of the solution. And what is not often discussed during the recitation of Europe's woes is that it was in Europe, courtesy of CONSOB, the Italian financial regulator, that the first steps were taken to introduce crowdfunding as a viable, stable and reliable option for growth.
The applications of crowdfunding, peer-to-peer investing and new online funding models are vast. As the new online market emerges, there are several opportunities for creating access to new audiences. Real estate has presented many opportunities in the past and it seems many utilities of crowdfunding are being applied to the well-known sector. AngelList and FundersClub both recently requested and received "no action" relief from the SEC staff. "No action" letters are often complicated and the law surrounding the discussion is extremely opaque. We have sought to set out the implications of the relief granted by the staff at the SEC as well as a summary of the type of structures the two companies intend to employ, the assumptions upon which they requested and were granted relief and a number of other salient points.
As the crowdfunding community and U.S. capital markets sector at large await the final rules and regulations that will effectuate the remaining portions of the Jumpstart Our Business Startups Act (JOBS Act), the staff of the SEC’s Division of Corporation Finance has issued additional guidance in relation to the broker-dealer registration exemption in Title II of the JOBS Act via a “frequently asked questions” (FAQs). This note will attempt to explain the exemption, in light of the new release by the SEC, and highlight the significance of this portion of the JOBS Act. |
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