SEC Issues Revised C&DI on Intrastate Crowdfunding | Practical Law

SEC Issues Revised C&DI on Intrastate Crowdfunding | Practical Law

The SEC's Division of Corporation Finance issued a revised compliance and disclosure interpretation (C&DI) addressing intrastate crowdfunding under Rule 147 under the Securities Act.

SEC Issues Revised C&DI on Intrastate Crowdfunding

Practical Law Legal Update 6-583-5785 (Approx. 3 pages)

SEC Issues Revised C&DI on Intrastate Crowdfunding

by Practical Law Corporate & Securities
Published on 03 Oct 2014 • USA (National/Federal)
The SEC's Division of Corporation Finance issued a revised compliance and disclosure interpretation (C&DI) addressing intrastate crowdfunding under Rule 147 under the Securities Act.
On October 2, 2014, the SEC's Division of Corporation Finance issued a revised compliance and disclosure interpretation (C&DI) addressing intrastate crowdfunding under Rule 147 under the Securities Act.
Rule 147 grants an exemption from registration to issuers conducting an intrastate offering that satisfy certain conditions, including that general advertising and general solicitation to market the securities are allowed only within the issuer's state. However, using an established internet presence to issue information about specific investment opportunities would likely involve offers to residents outside the state in which the issuer does business.
Revised Question 141.05 builds on guidance the staff provided in April 2014 (see Legal Update, SEC Issues New and Revised C&DIs on Intrastate Crowdfunding) by providing that issuers could implement technological measures to:
  • Limit communications that are offers only to persons whose Internet Protocol (IP) address originates from a particular state or territory.
  • Prevent offers from being made to persons whose IP address originates in other states or territories.
The revised C&DI also reminds issuers that:
  • Offers should include disclaimers and restrictive legends making it clear that the offering is limited to residents of the relevant state under applicable law.
  • They must comply with all other conditions of Rule 147, including that sales may only be made to residents of the same state as the issuer.
To learn more about Rule 147 and intrastate crowdfunding, see Practice Note, Road Map for Undertaking a Private Offering: Rule 147: The Intra-state Offering Exemption and Article, Crowdfunding Right Now: Alternatives to Title III of the JOBS Act.