Demystifying the Recently Enacted Crowdfunding and Private Offering Reforms: Opportunities for Issuers and Investors
By MICHAEL ZUPPONE
The Senate and House have recently passed, and President Obama shortly is expected to sign into law, the Jumpstart Our Business Startups Act of 2012, or JOBS Act, a series of deregulatory reforms that are intended to facilitate capital formation in the United States. The JOBS Acts crowdfunding and private offering reforms represent historically significant deregulatory changes to the Securities Act of 1933, a law that as previously administered by the Securities and Exchange Commission has placed significant impediments on the ability of startups and established enterprises to solicit investment capital from investors in the United States.
In effect, the legislation turns on its head the prevailing orthodoxy embodied in the Securities Act and SEC regulatory policy, an orthodoxy many have asserted has unnecessarily constrained enterprises in their efforts to raise seed and growth capital through non-public offerings exempt from registration with the SEC. The JOBS Act crowdfunding and private offering reforms will enable market innovators to radically transform how venture and other capital is raised in the United States.