Open AccessFrom Revolutionary to Palace Guard: The Role and Requirements of Intermediaries Under Proposed Regulation Crowdfunding
Author(s) -
Andrew D. Stephenson,
Brian R. Knight,
Matthew Bahleda
Publication year - 2014
Publication title -
michigan business and entrepreneurial law review
Language(s) - English
Resource type - Journals
eISSN - 2375-7558
pISSN - 2375-7523
DOI - 10.36639/mbelr.3.2.from
Subject(s) - intermediary , business , guard (computer science) , statutory law , discretion , work (physics) , private placement , law and economics , finance , investment banking , law , economics , political science , engineering , computer science , mechanical engineering , programming language
Intermediaries in securities crowdfunding face significant requirements as a result of the statutory mandates of Title III of the JOBS Act. The SEC, in its proposed rules, provided structure to these requirements. The proposed rules would create strict requirements for intermediaries regarding their relationships with investors and how they undertake crowdfunding transactions under Section 4(a)(6) of the Securities Act. The proposed rules would also create and establish the guidelines for funding portals, a new type of limited purpose securities broker. While some commentators decry the SEC for placing undue burdens and legal liabilities on intermediaries in securities crowdfunding, the SEC had limited discretion in the proposed rules in regards to those issues. It is unclear what type of market will develop as a result of these rules as market participants work through the challenges and opportunities of securities crowdfunding.