I just want to clarify for everyone since all kinds of wrong info is out there about what the crowdfunding bill says and what its status is. H.R. 3606 is the only bill going through at this point. Portions of H.R. 2930 and S.2190’s terms were cut and pasted essentially and put into the main H.R. 3606 JOBS Act. I posted a review of the bill, its Congressional summary and history, and links to the actual text in my blog listed below.
David is correct, the SEC has up to 270 days to implement rules to follow to comply with the new law. They normally issue proposed rules, allow a comment period, and then implement the actual rule. The law discusses the use of a new term called a “funding portal” for this sub-class of intermediaries. These proposed websites would fall into that sub-class, which need to go through a process of registering with the SEC. The intent appears to be that the process of registering with the SEC is less burdensome than registering as a broker dealer, but includes significant disclosure and compliance requirements. The funding portal, or its officers/management, cannot be so-called “bad actors” for things like conviction of a felony or misdemeanor involving the sale of securities.
The bill does list 12 requirements of the intermediary; however, there is some discretion allowed to the SEC to implement further rules or procedures for registration. One should also be aware of the serious potential liability these intermediaries could face under the anti-fraud rules in connection with the sale of securities. Although there are plenty of people who will probably pop up overnight to try to make money off this, I would caution anyone wanting to just jump into this business to be aware of all the risks, even after the SEC provides rules to implement crowdfunding and instruct companies on how to register as a funding portal.
H.R. 3606 review and text listed here: