How Equity Crowdfunding Websites Are Regulated.
When it comes to investing your hard-earned money, you want to be sure that you’re doing so in a way that is not only legal but also wise. With the advent of equity crowdfunding websites, more and more people are looking for ways to invest in startups and small businesses. But how are these websites regulated?
The answer lies with the Securities and Exchange Commission (SEC). The SEC is responsible for regulating the offer and sale of securities — which includes stocks, bonds, and other investment instruments — in the United States. In May 2016, the SEC adopted rules that allow companies to raise money through equity crowdfunding.
Under the new rules, companies can raise up to $1 million in a 12-month period from both accredited and non-accredited investors. Accredited investors are individuals who meet certain criteria, such as having a net worth of over $1 million or an annual income of over $200,000. Non-accredited investors are individuals who do not meet these criteria.
The rules also require companies to disclose certain information to potential investors, including information about the company’s business plan, financial condition, and the risks associated with investing. Equity crowdfunding websites must also register with the SEC as either a broker-dealer or a funding portal.
If you’re thinking about investing in a startup or small business through an equity crowdfunding website, it’s important to be aware of the rules and regulations that govern these types of websites. By understanding how these websites are regulated by the SEC, you can be sure that you’re making a wise and legal investment.
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