The Deal: States Greet Crowdfunding With Hostility
Even under the new rules, private securities offerings under Rule 506 of the Securities Act will still mostly be limited to accredited investors. The new general solicitation rule also established a list of steps that private placement issuers can take to verify that investors are accredited.
The new unit of the Massachusetts Securities Division will consist of information technology staff and attorneys. It will be called I-CROWD, which stands for Internet Crowdfunding and Offerings Watch Department.
The I-CROWD unit will assess the impact of changes in the laws and rules that apply to unregistered offerings, according to Galvin's office. It also will gather data about the types and quantity of public advertising used for unregistered securities. In addition, the unit will track how issuers use the new rules allowing general solicitation and advertising, and compile information on how issuers verify the accredited status of their investors. The unit will monitor Web portals in Massachusetts with the intention of detecting fraud early and referring cases for enforcement action.
While "some states are doing everything they can to kill crowdfunding," others like Georgia, Kansas and North Carolina may be doing a better job of regulating crowdfunding than even envisioned by the JOBS Act, Sidman said."Georgia has a much better, smart and less onerous platform for regulating crowdfunding," he said. "It's a model much closer to the original
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