This bill would provide several regulatory reforms aimed at making it easier for businesses and individuals to use crowdfunding as a way to fundraise. Crowdfunding is where groups of people pool money that’s usually made up of small individual contributions over the internet to invest in a company or support others’ efforts to accomplish a certain goal.
The crowdfunding exemption from certain prohibitions related to interstate commerce would be raised from $1 million to $5 million for total amount of securities sold to all investors by an issuing company. Crowdfunding platforms that want to disqualify a securities issuer need to have a reasonable basis for doing so, which would include:
Making an untrue statement of a material fact;
Omitting a fact needed to avoid making misleading statements;
Engaging in fraud or deceit.
The company looking to offer securities through crowdfunding would be allowed to ask for non-binding indications of interest from potential investors that may be involved in the prospective offering if:
No investor funds are accepted by the issuer;
Any material change in the information furnished during the actual offering from the information furnished during the solicitation of interest is highlighted to potential investors in the information filed with the Securities and Exchange Commission (SEC).