Sec. 476. Crowdfunding exemption
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/bill/115/hr/10/rh/section-476A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Section 4(a) of the Securities Act of 1933 ( 15 U.S.C. 77d ) is amended by striking paragraph
(6)and inserting the following: transactions involving the offer or sale of securities by an issuer, provided that— in the case of a transaction involving an intermediary between the issuer and the investor, such intermediary complies with the requirements under section 4A(a); and in the case of a transaction not involving an intermediary between the issuer and the investor, the issuer complies with the requirements under section 4A(b). . Section 4A of the Securities Act of 1933 ( 15 U.S.C. 77d–1 ) is amended to read as follows: For purposes of section 4(a)(6), a person acting as an intermediary in a transaction involving the offer or sale of securities shall comply with the requirements of this subsection if the intermediary— warns investors, including on the intermediary’s website used for the offer and sale of such securities, of the speculative nature generally applicable to investments in startups, emerging businesses, and small issuers, including risks in the secondary market related to illiquidity; warns investors that they are subject to the restriction on sales requirement described under subsection (e); takes reasonable measures to reduce the risk of fraud with respect to such transaction; registers with the Commission and the Financial Industry Regulatory Authority, including by providing the Commission with the intermediary’s physical address, website address, and the names of the intermediary and employees of the intermediary, and keep such information up-to-date; provides the Commission with continuous investor-level access to the intermediary’s website; requires each potential investor to answer questions demonstrating— an understanding of the level of risk generally applicable to investments in startups, emerging businesses, and small issuers; an understanding of the risk of illiquidity; and such other areas as the Commission may determine appropriate by rule or regulation, including information relating to the owners’ and management’s experience, and any related party transactions and conflicts of interest; carries out a background check on the issuer’s principals; provides the Commission and potential investors with notice of the offering not less than 10 days prior to such offering, not later than the first day securities are offered to potential investors, including— the issuer’s name, legal status, physical address, and website address; the names of the issuer’s principals; the stated purpose and intended use of the proceeds of the offering sought by the issuer; and the target offering amount and the deadline to reach the target offering amount; outsources cash-management functions to a qualified third party custodian, such as a broker or dealer registered under section 15(b)(1) of the Securities Exchange Act of 1934, a trust company, or an insured depository institution; makes available on the intermediary’s website a method of communication that permits the issuer and investors to communicate with one another; provides the Commission with a notice upon completion of the offering, which shall include the aggregate offering amount and the number of purchasers; and For purposes of section 4(a)(6), an issuer who offers or sells securities without an intermediary shall comply with the requirements of this subsection if the issuer— warns investors, including on the issuer’s website, of the speculative nature generally applicable to investments in startups, emerging businesses, and small issuers, including risks in the secondary market related to illiquidity; warns investors that they are subject to the restriction on sales requirement described under subsection (e); takes reasonable measures to reduce the risk of fraud with respect to such transaction; provides the Commission with the issuer’s physical address, website address, and the names of the principals and employees of the issuers, and keeps such information up-to-date; provides the Commission with continuous investor-level access to the issuer’s website; requires each potential investor to answer questions demonstrating— an understanding of the level of risk generally applicable to investments in startups, emerging businesses, and small issuers; an understanding of the risk of illiquidity; and such other areas as the Commission may determine appropriate by rule or regulation; provides the Commission with notice of the offering not less than 10 days prior to such offering, not later than the first day securities are offered to potential investors, including— the stated purpose and intended use of the proceeds of the offering sought by the issuer; and the target offering amount and the deadline to reach the target offering amount; outsources cash-management functions to a qualified third party custodian, such as a broker or dealer registered under section 15(b)(1) of the Securities Exchange Act of 1934, a trust company, or an insured depository institution; makes available on the issuer’s website a method of communication that permits the issuer and investors to communicate with one another; does not offer personalized investment advice; provides the Commission with a notice upon completion of the offering, which shall include the aggregate offering amount and the number of purchasers; and For purposes of section 4(a)(6), an issuer or intermediary may rely on certifications as to annual income provided by the person to whom the securities are sold to verify the investor’s income. The Commission shall make the notices described under subsections (a)(9), (a)(13), (b)(8), and (b)(13) and the information described under subsections (a)(4) and (b)(4) available to the States. With respect to a transaction involving the issuance of securities described under section 4(a)(6), a purchaser may not transfer such securities during the 1-year period beginning on the date of purchase, unless such securities are sold to— the issuer of such securities; or an accredited investor. With respect to a transaction described under section 4(a)(6) involving an intermediary, such intermediary shall not be required to register as a broker under section 15(a)(1) of the Securities Exchange Act of 1934 solely by reason of participation in such transaction. Nothing in this section or section 4(a)(6) shall be construed as preventing an issuer from raising capital through methods not described under section 4(a)(6). . Not later than 180 days after the date of enactment of this Act, the Securities and Exchange Commission shall issue or revise such rules as may be necessary to carry out section 4A of the Securities Act of 1933, ans amended by this Act. In issuing or revising such rules, the Commission shall consider the costs and benefits of the action. Not later than 180 days after the date of enactment of this Act, the Securities and Exchange Commission shall by rule or regulation establish disqualification provisions under which an issuer shall not be eligible to utilize the exemption under section 4(a)(6) of the Securities Act of 1933 (as amended by this Act) based on the disciplinary history of the issuer or its predecessors, affiliates, officers, directors, or persons fulfilling similar roles. The Commission shall also establish disqualification provisions under which an intermediary shall not be eligible to act as an intermediary in connection with an offering utilizing the exemption under section 4(a)(6) of the Securities Act of 1933 based on the disciplinary history of the intermediary or its predecessors, affiliates, officers, directors, or persons fulfilling similar roles. Such provisions shall be substantially similar to the disqualification provisions contained in the regulations adopted in accordance with section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 15 U.S.C. 77d note).
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- 15 USC 77d–1
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